PUC chief tells lawmakers summer blackouts unlikely

Monday, June 3, 2002 | 9:50 a.m.

CARSON CITY -- Nevada Power Co. should make it through the hot summer months without blackouts in Clark County, state Public Utilities Commission Chairman Don Soderberg has assured state legislators.

"I can't tell you everything is rosy, but it is getting better," Soderberg said of the Las Vegas utility's financial condition.

Sen. Mike Schneider, D-Las Vegas, questioned Soderberg Friday about Nevada Power's short-term future at a meeting of the Legislative Commission.

"I don't want to get to the July 4th weekend and then have everything crash," Schneider said.

There have been concerns that Nevada Power may not have the financial resources to sign short-term power contracts to tide the utility through the high-use summer months.

The PUC cut $437 million from the request rate increase of $922 million of Nevada Power, which has now filed suit to collect the full amount.

While Soderberg called the increase "generous based on cost," Soderberg said it still hurt the utility's ability to get short-term financing. Nevada Power's bond ratings were lowered to junk status after the decision.

The commission last week approved a one-time increase of $16 million for the utility to raise money for summer energy buys. Soderberg said that will not solve the problem, but the financial community viewed that as positive news and could loosen its lending practices, he said.

"It will be very close to the line at the end of June," he said. "There will be a deeper problem at the end of July but August and September look good."

Soderberg said members of his staff, the consumer advocate's office and the utility are in Washington trying to modify some of the contracts of those who supply power to the Las Vegas company. He said the rates charged by the suppliers were "unreasonable."

He said he hopes the effort will result in smaller payments for Nevada Power.

The Legislative Commission approved a PUC regulation to encourage utilities to use renewable energy.

The rule was to implement a 2001 law requiring electric utilities to generate or acquire a minimum of 5 percent of their electricity from renewal energy systems in 2003 and 2004, raising it to 15 percent by 2013.

In January Nevada Power said 5.5 percent of its electricity comes from geothermal resources, solar, wind and biomass.

Another 41.9 percent of its electricity is generated from coal, 25 percent from natural gas, 8.3 percent from nuclear and 17 percent from hydroelectric, the utility said.