PUC rejects Nevada Power request

Friday, March 1, 2002 | 9:25 a.m.

Any money Nevada Power Co. hopes to recoup from ratepayers for energy used last year will have to be recovered during the next three years, state regulators say.

The Public Utilities Commission of Nevada on Thursday rejected a proposal by Nevada Power to spread those payments over six years, citing a state law that sets a three-year limit to recover that money.

If the commission accepts Nevada Power's request to recoup $922 million plus interest, ratepayers can expect increases of up to 25 percent in their monthly electricity bills between April 1 and 2005. Nevada Power's six-year plan would have reduced the rate hike to roughly 12.5 percent.

Commission Chairman Donald Soderberg and fellow commissioner Adriana Escobar Chanos voted to limit the rate case to a three-year period, and commissioner Richard McIntire abstained. But Soderberg praised Nevada Power for making the six-year offer. He also criticized unnamed opponents of the proposed rate increase for alleging the utility made the offer out of self-interest.

"I don't think our decision today should be taken as a rebuff of the petition," Soderberg said of Nevada Power's rate request. "A six-year amortization does not help them in any sense of the imagination.

"The utility was trying to find a creative way to assist its customers. I encourage them to come up with creative solutions."

Nevada Power spokeswoman Andrea Smith said the utility was not disappointed in the commission's decision and will continue to search for ways to mitigate its impact on consumers.

"The six-year offer is evidence that we're trying to find solutions," Smith said.

In rejecting Nevada Power's proposal the commission majority relied on arguments from its own staff and the Legislative Counsel Bureau as well as testimony from the state Bureau of Consumer Protection and MGM MIRAGE. The consumer protection bureau, a branch of the attorney general's office, and the resort corporation have alleged that the utility paid too much for energy used by Southern Nevadans last March through September.

The state law in question, passed last year, gave Nevada Power three years to recoup costs of energy during that seven-month period. The commission agreed with the consumer protection bureau that Nevada Power's proposal was unlawful, in part because the six-year offer was contingent on the utility receiving the full $922 million.

State Consumer Advocate Timothy Hay had argued that extending the rate hikes over six years also would result in ratepayers having to pay $285 million in interest or "carrying charges," rather than $138 million over three years.

"The utility is protected by setting a three-year recovery to ensure the electric utility recovers from the ratepayers the costs of purchased fuel and purchased power," the commission stated in its written order.