Higgins hopes rate cut opens power dialogue

Friday, Nov. 15, 2002 | 11:21 a.m.

Sierra Pacific Resources Chairman Walt Higgins expressed hope that a request by subsidiary Nevada Power Co. to reduce rates will also produce a fruitful discussion with state regulators about future energy policy in Nevada.

On Thursday, Nevada Power filed with the state Public Utilities Commission an application the utility said would reduce rates by 5.3 percent overall and 5.6 percent for residential customers if approved.

Higgins wrote in a cover letter attached to the application that the Western energy crisis that led to high wholesale energy prices beginning in mid-2000 "has abated somewhat during the past year and we have made every effort to see that our customers benefit from these developments."

Nevada Power, which buys about half of its power on the wholesale market and is therefore vulnerable to volatile price spikes, is seeking a rate reduction because its fuel and energy costs have dropped.

"Nonetheless, we still have deep concerns about the future of Nevada's energy supplies and potential ramifications for the state's overall long-term economic health," Higgins wrote.

"We are especially concerned that continued large dependence on volatile wholesale power markets will inevitably lead to another set of rate challenges when the power markets again suffer volatility. With this in mind, we respectfully offer the human and other resources of Nevada Power to work closely with you and others to arrive at energy policies and actions that will prove beneficial to our entire state and its citizens."

State Consumer Advocate Timothy Hay, a frequent critic of Nevada Power, said he plans to review the application today.

The application seeks to set rates for two major portions of a consumer's electricity bill. One such rate, known as the Base Tariff Energy Rate, pays for ongoing fuel and energy purchases. Nevada Power wants to reduce this rate on residential customers from 5 cents per kilowatt hour to 4.18 cents per kilowatt hour to reflect the decrease in fuel and energy costs.

The other rate deals with costs Nevada Power is seeking to recover for energy that will have been used from Oct. 1, 2001 through Sept. 30. The company wants to charge residential customers slightly more than three-tenths of 1 cent per kilowatt hour to recover those costs. The net effect of the two rate proposals is an overall decrease in electricity rates, Higgins said in a telephone interview Thursday.

Higgins said he believes his company has addressed complaints that the state PUC aired in March when it granted Nevada Power permission to recover only $485 million of the $922 million it was seeking for energy used last year. The PUC complaints about Nevada Power and parent Sierra Pacific included poor record-keeping and shoddy risk management.

"We have addressed every single thing in our practices, policies and procedures that the PUC addressed," Higgins said.06