Nevada Power executives fired

Tuesday, May 21, 2002 | 11:12 a.m.

Nevada Power Co. President Mark Ruelle and three vice presidents were out of jobs Monday, less than two months after the Las Vegas utility suffered a major defeat in a high profile rate case.

Joining Ruelle among the unemployed were Steven Oldham, senior vice president of energy supply, Douglas Ponn, vice president of public policy, and Paul Heagen, vice president of corporate communications and marketing.

The management shake-up came on the heels of a March 29 ruling by the state Public Utilities Commission that awarded Nevada Power only $485 million of the $922 million it is seeking from ratepayers for energy used last year. Following the ruling, stock in Nevada Power parent Sierra Pacific Resources plunged on the New York Stock Exchange, the utilities' credit ratings were lowered from investment grade to "junk" status and Sierra Pacific suspended its next quarterly dividend.

Walt Higgins, chairman and chief executive officer of Sierra Pacific, announced the departure of the four men effective immediately and indicated he will take over as Nevada Power's fourth president since 2000. He said in a prepared statement that Oldham and Ponn retired, that Heagen will return to his own consulting business and that Ruelle is pursuing "other opportunities."

"These individuals are among the hardest working, most capable and dedicated, high-integrity people that I have ever had the pleasure of working with," Higgins stated. "As we move forward, however, it was very clear that we needed to make some changes in order to restore the trust and confidence of our customers, our community and our employees."

In addition to battered stock prices and credit ratings, Sierra Pacific announced last week that it suffered $303.9 million in net losses for the first quarter of the year and repeated its concern that bankruptcy was a possibility.

During the PUC hearings in March, Nevada Power officials were lambasted by critics for displaying poor strategy in the purchase of energy from wholesale suppliers since 1999. The company's public image also suffered after its initial announcement last fall that it was seeking as much as a 25 percent rate increase over the next three years in its effort to receive $922 million for energy used from March 2001 through September.

But the three-member PUC agreed with critics that Nevada Power acted irresponsibly and was caught unprepared in the months leading up to the energy crisis that struck the West in 2000. Consequently, the company paid far more for energy from wholesalers than it should have, the PUC and fellow critics argued. The $437 million the PUC subtracted from the $922 million request meant that bills would stay roughly the same for most ratepayers for at least another year.

"The company appears to be signaling that it wants to take a new direction," PUC Chairman Donald Soderberg said in a prepared statement. "While we understand changes are always hard and we wish the departing executives well, I think the fact that the company is attempting to rectify problems will be well received."

Since Nevada Power merged into Sierra Pacific Resources in July 1999, the utilities have gone through several upper management changes. Michael Niggli, president of Nevada Power at the time of the merger, became chairman and chief executive of Sierra Pacific. In June 2000, Steve Rigazio became president of Nevada Power while Niggli retained his duties with the parent company.

But Niggli resigned in July 2000, a situation blamed largely on Sierra Pacific's plunging stock price at the time, and was replaced by Higgins. Rigazio, who had Lou Gehrig's disease, was forced to retire last year because of his illness and was replaced by Ruelle.

Ruelle, 40, joined Sierra Pacific in 1997 and was senior vice president, chief financial officer and treasurer of the parent before he was elevated to president of Nevada Power last May. Ruelle played a major role in the merger.

He also helped develop the so-called deferred energy accounting plan that the utility relied upon to buy energy from wholesalers with state authorization that any "prudent" purchases could be recovered from ratepayers.

State Consumer Advocate Timothy Hay and Steve Boss, president of the Nevada Energy Buyers Network, said they weren't surprised by the management shuffle. Both men have criticized Nevada Power's business practices.

"Obviously, the management of the company has been coping with enormous amounts of issues," Hay said. "We believe some of the management decisions were flawed, which is why the company is in the situation it's in."

Ponn, 54, a former member of the PUC when it was known as the Public Service Commission, joined Sierra Pacific in 1986 and served as the utilities' chief legislative lobbyist. He had been elevated to vice president of public policy last May, though he had been a lobbyist for most of the 1990s.

"Doug Ponn had talked of retiring for some time," Hay said. "He was one of the most solid guys on the management team."

Oldham, 51, joined Sierra Pacific in 1976 and reached the level of vice president in 1994. Named a senior vice president only last August, he was in charge of the utilities' energy trading activity. That phase of the company's operations was among the most harshly attacked by critics, including the PUC.

Oldham also had been playing a key role in ongoing efforts by Nevada Power to have some of its long-term energy contracts negated by the Federal Energy Regulatory Commission.

Heagen, 49, also became a company vice president last year after spending more than a decade with GTE Corp.

Boss said he thought the management moves were precipitated largely by Sierra Pacific's stock prices, which plunged from $15 a share to the $6 range following the PUC ruling.

Sun reporter Launce Rake contributed to this report.