Judge to hear Nevada Power lawsuit

Cy Ryan and Steve Kanigher

Friday, May 31, 2002 | 9:30 a.m.

CARSON CITY -- A District Court judge scheduled an Oct. 17 hearing on a Nevada Power Co. lawsuit that seeks to collect an additional $437 million from Southern Nevadans for energy used last year.

District Judge Bill Maddox of Carson City Thursday rejected a petition by the state Bureau of Consumer Protection to dismiss the utility's lawsuit, which names the state Public Utilities Commission as the defendant.

"We're going forward," Maddox said of the case.

Nevada Power alleged that the PUC erred on March 29 when it awarded the utility only $485 million of the $922 million it is seeking from ratepayers for energy used between March 2001 and September. Nevada Power officials have said the ruling put the company in financial jeopardy and that bankruptcy remains a possibility.

Maddox set a schedule for lawyers to file their briefs and also wants to review the record the PUC compiled in the case.

Nevada Power attorney William Peterson told Maddox that every day there is a delay in the final ruling the utility is unable to "collect a substantial amount of money."

"We're entitled to be expeditiously heard," Peterson said.

But Maddox said he could not hear the case sooner because he has other trials, including a murder case.

Peterson argued that the judge could order the PUC to approve the full $922 million request. But Deputy Attorney General Marie Martin-Kerr, who represents the consumer protection bureau, argued that Maddox could set aside the PUC order but cannot "engage in rate making."

Maddox said he will decide that issue after hearing the arguments in October.

Of the $437 million the PUC subtracted from Nevada Power's request, Peterson alleged that $180 million was deducted as the result of irregularities in the way the case was conducted. The $180 million disallowance was because of a low-cost, long-term energy contract the PUC believed Nevada Power could have received from Merrill Lynch in 1999.

Nevada Power had argued that it never had a solid deal with Merrill Lynch and had concerns about the price and reliability of the proposed contract. However, the Western energy crisis struck the following year and Nevada Power critics argued that the utility ended up paying far more for energy from wholesalers than it would have had they signed the Merrill Lynch contract.

Peterson alleged that the Bureau of Consumer Protection got permission to take the deposition of two power suppliers of Nevada Power in connection with the Merrill Lynch deal. He said the bureau then passed documents to MGM MIRAGE, which was also a party in the rate case. But Peterson said he never had the opportunity to question those giving the depositions.

"There was collusion among the parties to subvert our rights," Peterson said. "It was an abuse of the subpoena process."

But state Consumer Advocate Timothy Hay said the allegations by Peterson were "totally unfounded."

Peterson said after the hearing that if Nevada Power prevails in the lawsuit, the utility wants to impose the higher rates retroactive to April 1.