PUC to vote on power rate hike

Friday, March 29, 2002 | 11:54 a.m.

The state Public Utilities Commission will vote today on a recommendation from the chairman that would raise the monthly bills of Nevada Power Co. customers one-half of 1 percent beginning Monday.

The draft order from PUC chairman Donald Soderberg released Thursday recommended that Nevada Power receive only $665 million of the $922 million it was seeking for energy used last March through September. The proposal is about 27 percent less than what Nevada Power wanted.

The rate hike percentage takes into account the 3 percent decrease in general rates for administrative costs that the commission approved Wednesday.

If Soderberg's recommendation is approved by the three-member commission, a consumer who used 2,300 kilowatt hours a month in a 2,000-square-foot home would see his monthly bill increase from $212.12 to $213.17. That works out to an increase of only $12.60 over the course of a year.

The recommendation, if approved, would be a far cry from original estimates that the rate increase could be as high as 25 percent over the next three years. It is still possible that there could be further rate hikes in 2003 and 2004, however, though the percentages are not known at this time.

The way the draft order is written, Nevada Power would recover 20 percent of the $665 million next year and 80 percent in the following two years. The company also could come back by Dec. 1 and ask for further rate increases for energy used this year.

Soderberg's draft order charged that Nevada Power bought too much energy last February, April and September from other generators. The company was chastised for exceeding its target of procuring 107 percent of the energy it needed last year to keep the lights on in Southern Nevada.

"NPC (Nevada Power Co.) apparently was more focused on reliability at any price, rather than conducting a thorough analysis of the options available," the draft order stated. "There is no support in the record for NPC's focus on reliability at any price and their continued purchase of power, when the 107 percent strategy had already been met."

The recommendation to reduce Nevada Power's request by $256.9 million calls into question whether the company can remain solvent by receiving only about 73 percent of what it sought. It also raises questions as to whether the company will be able to execute long-term energy contracts it had negotiated with other companies in an attempt to decrease potential rate hikes.

"We're going to comment after the commission has issued its final order," Nevada Power spokesman Paul Heagen said Thursday.

A fact sheet attached to the draft order stated that Soderberg intends today to raise three additional items for commission consideration that could further reduce the amount Nevada Power could collect over the next three years from this rate case.

It remains highly likely that any commission ruling will be appealed to district court by either the company or one of its critics. The state Bureau of Consumer Protection, for instance, had sought a reduction of $950 million.

"We have not had a chance to review the draft order but it appears that the language in the order is very critical of the company and its behavior," state Consumer Advocate Timothy Hay said Thursday. "The adjustment is not nearly what we recommended but it's certainly a substantial reduction.

"The hundreds of consumers who attended the public hearings certainly had an impact."