PUC decision could tell Nevada Power fate

Tuesday, May 28, 2002 | 11:14 a.m.

The fate of Nevada Power Co. may rest on what happens today when rate cases involving its sister utility, Sierra Pacific Power Co. of Reno, are decided by the state Public Utilities Commission.

The PUC was scheduled to vote on requests by Sierra Pacific Power to recover $205 million from Northern Nevada rate payers for energy used last year. The utility also is seeking an additional $16 million from consumers to cover administrative costs.

PUC Commissioner Richard McIntire, in a draft order issued Saturday that made no recommendation, stated that Sierra Pacific Power did not use sound business judgment in its energy purchases.

The stock price of Sierra Pacific Resources, parent of both Nevada Power and Sierra Pacific Power, fell 12.9 percent to $6.80 a share in late morning trading today on the New York Stock Exchange. At the close of trading on Friday, the stock was selling for $7.81 a share.

Walt Higgins, Sierra Pacific chairman and chief executive officer, has said that a large disallowance from the $205 million request could result in a further downgrade of the parent company's credit ratings and those of its subsidiaries. Bankruptcy remains a possibility, he has said.

Nevada Power was placed in financial jeopardy when the PUC ruled on March 29 to give the utility only $485 million of the $922 million it is seeking from Southern Nevada ratepayers for energy used last year, Higgins has said.

The ruling caused the credit ratings of Sierra Pacific and Nevada Power to be reduced from investment grade to "junk" status. Company officials have said that the credit downgrades have made it harder for them to buy energy from wholesalers to meet peak summer demand.

Sierra Pacific Power serves 315,000 Northern Nevadans, about half the number of customers Nevada Power has in Southern Nevada.

In related news Sierra Pacific will have a new senior vice president of energy supply on Wednesday. The new executive, John Young, has nearly 20 years of experience in the utility industry.

Most recently, Young worked in Atlanta as president and chief executive officer of Avalon Consulting, a firm specializing in the energy industry. He had also spent 17 years as an executive with Southern Company, a holding company with utilities in Georgia, Florida, Mississippi and Alabama. Southern Company is the largest wholesale power provider in the southeastern United States.

Young replaces Steven Oldham, one of four utility executives of Sierra Pacific and Nevada Power who became unemployed last week.