PUC likely to reject firm’s attempt to leave power grid

Malcolm Hall

Friday, March 29, 2002 | 10:50 a.m.

In the first test of a new Nevada law that lets large companies buy power from sources other than the state's two major utilities, the Public Utilities Commission of Nevada today is likely to reject an application by Barrick Goldstrike Inc. to leave the Sierra Pacific Power Co. electricity system.

Siding with the state's consumer advocate, commission Chairman Don Soderberg on Thursday issued a draft order recommending that Toronto-based Barrick's application be denied because Sierra Pacific owns an interest in the generating plant that Barrick contracted with to be its new supplier.

This conflicts with a condition of the law that calls for companies that leave the system to buy power from new sources other than the state's primary utilities, Sierra Pacific and its sister Nevada Power Co.

The commission will vote on the matter today, following action on Nevada Power's $922 million deferred energy rate hike request.

"The commission believes that too many issues remain unresolved in this matter to find Barrick's application to be in the public interest," Soderberg wrote. "Since none of the parties to the proceeding brought fourth evidence to support their interpretation of this section of the statute, the commissions should reserve judgment on the issue."

Barrick spokesman Vincent Borg said assuming the commission denies its application, "obviously we will consider options to re-file and decide what to do next."

Consumer Advocate Tim Hay said he raised the issue because under Assembly Bill 661, the departing customer has to get energy from a new source because the law's intent was to "enhance the state's energy resources beyond that consumed by customers of Nevada Power and Sierra Pacific Power," technically leaving more electricity for remaining customers.

"Barrick contracted with Idaho Power (Co.) for power from the Valmy plant up here, which is half owned by Sierra Pacific," Hay said from Carson City Thursday. "I was gratified that the commission acknowledged the issues we raised. Barrick can re-apply and attempt to correct the issues we had concerns with."

The law, which applies only to large companies and not residential or small commercial users, ensures that any customer that elects to buy electricity from an independent supplier may do so only if there is no economic disadvantage to the prominent utilities in the state and its customers.

Hay said he also objected to an agreement stipulated between the two companies calling for the gold mine operator to pay Sierra Pacific an $11.5 million exit fee for leaving the system, saying it "should pay more."

Barrick, now the world's second largest producer of gold, spends about $50 million a year for electricity to power the Goldstrike complex near Elko, where its two mines produced 2.45 million ounces of gold in 2000. The company also owns the Ruby Hill mine near Eureka and operates in Peru, Tanzania, Chile, Argentina, Australia and Canada.

The next tests of the new law will involve MGM MIRAGE -- which has 11 properties in Southern Nevada -- Station Casinos, Coast Resorts, the Sahara Hotel and Rouse Properties Inc.'s Fashion Show Mall, all of which have filed to leave Nevada Power's system.

Dave Gildersleeve, vice president of the Nevada Energy Buyers Network, which represents the casino companies and Fashion Show, said the Barrick decision was based on the commission not having enough information.

"Now that we know that, our responsibility is to provide enough information so the same claim can't be made when they render our decision," he said.

Hay said those applications have no meaning in regard to Barrick's because "there is a huge difference between Sierra Pacific's northern system and Nevada Power's southern system."

In December, Gage Parrish, chief financial officer for Coast Resorts, said the move is similar to what the company did with natural gas, which it buys from a provider other than Southwest Gas.

If the companies are allowed to leave the utilities, they still would be responsible for their share of fuel and power costs relating to Nevada Power's deferred energy rates.