Voters back public power agency

Wednesday, Nov. 6, 2002 | 11:15 a.m.

Tuesday's Question 14 ballot victory caused supporters to call for Sierra Pacific Resources to change its tune and consider a $3.2 billion offer by the Southern Nevada Water Authority to acquire subsidiary Nevada Power Co.

The nonbinding initiative asked Clark County voters whether they wanted a nonprofit public agency to provide electricity to Southern Nevadans. But the ballot measure was widely viewed as a referendum on the water authority's bid for Nevada Power.

The measure passed by a margin of 57 percent to 43 percent, prompting water authority General Manager Pat Mulroy to declare that a mandate had been achieved and that Sierra Pacific should come to the bargaining table.

"I would be pleasantly surprised if they did," Mulroy said. "I would be shocked but pleasantly surprised if they came to the table and said, 'All right, we're willing to take your offer seriously.'

"I am really pleased that the voters didn't let themselves get fooled by the misinformation in this campaign. Given the millions of dollars Nevada Power spent on this campaign and the fact that they didn't win, I hope that will encourage them to finally take our offer seriously."

But Nevada Power President Pat Shalmy said the company felt relatively good about the outcome of the vote, given its own polling had suggested early on that Question 14 was initially supported by four of every five voters.

"We're pretty pleased," Shalmy said. "We knew we would have a hard campaign. But it was a vague and misleading question and we think we got enough information out to cut it from 4 to 1 to 5 to 4 and we feel good about that. We found a lot of friends who believe in the private sector.

"I'm sure there will be a response from our board to the water authority. I can't predict what that response will be, but the board is meeting at the end of the week, probably on Friday, in Las Vegas."

State Consumer Advocate Timothy Hay, like Mulroy, said he believed the election results "sent a clear signal that voters in Clark County are advocating change in the way electricity is delivered to Southern Nevadans."

"Obviously the company spent enormous resources trying to persuade the public that they're doing a good job," Hay said. "In light of the outcome the citizens have spoken rather clearly that they're advocating changes."

The Clark County Commission put Question 14 on the ballot as an advisory measure only. They were encouraged to do so after many Southern Nevadans expressed anger over a series of electricity rate hikes dating back to the energy crisis that struck the West in 2000.

The water authority has argued that it could save ratepayers at least 20 percent immediately by acquiring Nevada Power because its superior credit rating means it would pay less to refinance the utility's debt. The water authority, a public agency that is Southern Nevada's leading electricity customer, also said it is interested in buying Nevada Power because it believes the company is too shaky financially and therefore an unreliable source of future energy.

But Sierra Pacific has refused to negotiate with the water authority, arguing that the bid for Nevada Power is not financially sound and that the public agency has no experience running an electrical utility.

The utility's position was reinforced in the Citizens Against 14 campaign, an intense television and radio blitz financed almost entirely by Nevada Power. Representatives of the Nevada Taxpayers Association, Las Vegas Chamber of Commerce and Nevada Seniors Coalition cut advertisements against Question 14.

"At least we made some inroads," Carole Vilardo, president of the taxpayers association and chairwoman of Citizens Against 14, said. "I'm disappointed we didn't win. We will support legislation that requires all ballot initiatives to have full fiscal impact on taxpayers. That was a big objection of mine about Question 14 because we didn't have enough information about the fiscal impact of that question.

"The irony of all this is that we had a ballot question that provided no information to the voting public. It was like a poll question. I would assume that whoever recommended this ballot measure knew that there was going to be a buyout offer, so why wasn't that added to the ballot question?"

Nevada Power had spent more than $1.6 million on the campaign through Oct. 24, with only about $16,162 coming from other sources. The water authority, meantime, couldn't fight back because it is prevented by law from participating in political campaigns.

A "yes" vote on Question 14, in essence, was to encourage the Nevada Legislature to let expire a state law that currently prohibits local governments from hostile takeovers of investor-owned utilities. The law expires on July 1.

Mulroy and Hay both said lawmakers should abide by the wishes of the voters to allow the law to expire if the water authority is unsuccessful in its efforts to acquire Nevada Power.

"Is the Legislature going to reduce rates by 20 percent and are they going to give the company $12 a share as we would do?" Mulroy said. "The bottom line is that Question 14 passed. What it says is that the public, or at least 57 percent of the public, has lost confidence in the company."

A "no" vote would have had the opposite effect of encouraging lawmakers to renew the hostile takeover law. Shalmy said the fact that 43 percent of Clark County voters disapproved of a government takeover of the electric utility could also possibly persuade lawmakers against taking drastic measures against the company.

"I'm confident they'll be responsible and listen to us that we need a statewide policy on energy that's in the best interests of the state," Shalmy said. "They want the public to have reliable, stable power and we're committed to working toward that.

"This company is in good shape and is getting back on its feet."

Nevada Power has until Nov. 15 to file for a rate hike for energy used this year. But Shalmy said the company plans to announce "good news" within the next 10 days that he said should be pleasing to ratepayers.

"We're doing all we can to get the rates lower," he said. "The numbers are still being worked out."

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