Lawsuit filed over rate hike

Friday, June 28, 2002 | 9:54 a.m.

CARSON CITY -- State Consumer Advocate Timothy Hay has sued to challenge the $485 million rate increase Nevada Power Co. was allowed to charge its customers in Clark County over the next three years.

Hay said he also is poised to ask the state Public Utilities Commission to reconsider its decision permitting Nevada Power to issue up to $300 million in long-term debt to pay its bills.

Nevada Power originally asked for $922 million in higher rates to pay for energy used last year by Southern Nevadans.

After the PUC decision in March, when that request was nearly halved, Nevada Power sued in District Court in Carson City, asking Judge Bill Maddox to order the full $922 million go into effect.

Hay filed a motion to intervene in that lawsuit asking the judge to deny the full amount. His lawsuit filed Thursday repeats that request.

The two suits will be consolidated into one case, and oral arguments are set for October.

Nevada Power spokeswoman Sonya Headen said the company had no comment on Hay's newest lawsuit because it had not yet received a copy.

Hay said he expects some support from major users in Southern Nevada who had opposed Nevada Power's rate plan.

Hay, in his suit, said Nevada Power was imprudent in its fuel purchases.

"Nevada Power knew that prices for wholesale power were increasing, but failed to take the kind of action that a prudent utility would have taken in order to hold down costs," Hay said. "The company knew it faced financial risks and failed to take steps to minimize our guard against such risks."

He said the failure of the company to act quickly in purchasing power forced the Las Vegas-based utility to pay more than it should have for the energy.

Hay said he expected to submit a petition next week to the PUC to reconsider its decision to allow Nevada Power to issue $300 million in long-term debt. He said the utility would probably have to pay 10 percent to 14 percent interest, which he called "exorbitant."