PUC to rule if hotels can bolt power company

Friday, July 19, 2002 | 10:54 a.m.

The state Public Utilities Commission opened its hearing on a request by five large customers of Nevada Power Co. who want to buy their electricity instead from a Houston company.

The five applicants -- MGM MIRAGE, Station Casinos Inc., Coast Hotels and Casinos Inc., Sahara hotel and Rouse Fashion Show Management LLC -- are attempting to take advantage of a state law passed last year.

The law stipulates that customers who average at least one megawatt of electricity use daily over the course of a year are eligible to apply to the PUC to buy retail electricity on the open market. During summer months, one megawatt is enough to power about 500 homes at any given time. During off-peak months, one megawatt can power about 1,000 homes at a time.

On Thursday, the PUC began taking testimony from the applicants, with hearings scheduled to conclude today. The PUC is expected to make its decision on July 30. If approved, the five applicants would be the first companies to be permitted to buy their electricity elsewhere under the state law.

The five applicants are hoping to begin buying their electricity as early as Nov. 1 from Reliant Resources Inc. of Houston. The contracts would run at least three years. The Securities and Exchange Commission recently approved an application to spin off Reliant Resources from energy giant Reliant Energy Inc.

The four resort companies and Rouse, which operates the Fashion Show mall, would be required to pay exit fees to Nevada Power. Included would be their share of the $485 million that the PUC ruled Nevada Power could charge ratepayers for energy used last year. That money will be collected from ratepayers over the next three years.

The state law was crafted so that applicants could leave Nevada Power only if they prove they are not hurting the Las Vegas utility's remaining customers. The applicants have argued that their departure would actually benefit Nevada Power because it would reduce the amount of high-priced electricity the utility would have to buy from wholesalers during periods of peak demand.

"We hope the commission finds that allowing these customers to leave would be in the public interest," Martha Ashcraft, an attorney retained by MGM MIRAGE, said.

In other action Thursday, the PUC upheld its May 28 ruling granting Sierra Pacific Power Co. of Reno $152.5 million of the $205 million it sought from Northern Nevada ratepayers for energy used last year. State Consumer Advocate Timothy Hay and Newmont Mining Corp., a major Northern Nevada customer, had wanted the PUC to grant Sierra Pacific Power a much smaller rate hike, but their requests were rejected.

Sierra Pacific Power and Nevada Power are subsidiaries of Sierra Pacific Resources.