Hearings on power rate hike to begin Monday

Friday, March 1, 2002 | 11:01 a.m.

Formal hearings into a request by Nevada Power Co. to recoup a state-record $922 million plus interest for energy used last year by Southern Nevadans begin Monday.

The hearings before the three-member Public Utilities Commission of Nevada follow more than a month of heated public debate over the proposed rate hike.

The commission, composed of gubernatorial appointees Donald Soderberg, Adriana Escobar Chanos and Richard McIntire, has until April 1 to decide on the rate hike. Observers of the process have predicted, however, that the commission's decision will be appealed in Clark County District Court by either the utility or its opponents.

A state law passed last year gave Nevada Power authority to seek money from ratepayers over the next three years to defray the costs of keeping the lights on in Southern Nevada between March and September of 2001. To do that, the utility said it had to purchase power from other generators to supplement its own generating capabilities.

Nevada Power has argued that the cost of providing such power nearly made the company insolvent because of the skyrocketing wholesale prices it was forced to pay. The utility blamed the high cost of power on numerous factors, including the California energy crisis and drought in the Pacific Northwest.

"We are pretty confident that we will make a good case," Nevada Power spokeswoman Andrea Smith said. "We believe that we have done a good job and that we should be able to recover the costs we incurred. But it doesn't stop us from looking at ways to mitigate this for our customers."

Critics have countered that, because of poor planning and ill-timed purchases, Nevada Power paid too much for power from other generators. The state Bureau of Consumer Protection, led by Consumer Advocate Timothy Hay, charged that Nevada Power paid $950 million more than it should have for energy last year.

"We obviously believe we have a solid case that the entire $922 million was imprudently incurred," Hay said. "We're confident our case will be persuasive."

MGM MIRAGE estimated the overpayment ranged from $635.9 million to $984.6 million, the Southern Nevada Water Authority said it was $243 million and the Public Utility Commission's staff said Nevada Power paid $80 million more than it should have.

Though the water authority is Nevada Power's single largest customer, it buys most of its power from the Colorado River Commission. Water authority spokesman Vince Alberta said the authority saved $30 million since 2000 by buying power at certain times from the river commission rather than from Nevada Power.

"What we're hoping for is that the facts of the case will be clearly analyzed, and that based on these facts the appropriate decision will be made," Alberta said. "We want to make sure that a fair decision is made for all parties, including the consumers."

Ratepayers have complained that the prospect of further rate hikes on top of those already received by Nevada Power since 2000 would be too much to swallow.

For example, 80-year-old Wanda Hamp of Las Vegas says she owes $979 for electricity for the past two months, even though her home is insulated and she keeps her thermostat at 68 degrees Fahrenheit.

"This is ridiculous," she said. "I live on only $1,320 a month from Social Security and a widow's pension from the Teamsters. If they shut off my power, I won't have lights or a phone. I might as well be dead."

The utility estimated that ratepayers would see increases of as much as 25 percent in their utility bills if the commission approved the full $922 million.

Nevada Power maintains that its credit rating and ability to obtain financing for future electricity purchases may be severely hampered if the commission agrees to anything less than the $922 million. The company has warned that local blackouts are possible if the utility is forced into bankruptcy.

The hearings at 101 Convention Center Drive will be similar to a court trial, including cross examination of Nevada Power and critics who have already filed testimony opposing the proposed rate hike. Comments taken from four prior town hall-style public hearings were also entered into the record and will be considered by the commission.

The hearings begin at 10 a.m.