Nevada Power proposes electricity rate cut for Las Vegas area

Friday, Nov. 15, 2002 | 12:08 p.m.

By KEN RITTER

Associated Press Writer

LAS VEGAS- Nevada Power Co. wants state regulators to let it cut electricity rates 5.3 percent, citing reduced wholesale energy prices and a stabilized energy market.

In an annual rate-setting request, the struggling southern Nevada electric utility said Thursday that it has asked the state Public Utilities Commission to approve an $81 million rate decrease.

It said the average residential customer's monthly bill in the summer would drop by $6.39, to $109.69.

Officials at Nevada Power's parent company Sierra Pacific Resources Inc. of Reno said wholesale power markets have stabilized since last year when the Las Vegas-based utility sought a record $922 million rate increase.

"Prices have come down dramatically in the past year," said Jack Leone, company communications and marketing vice president. "That's a large part of the decrease, as well as what lies ahead."

Thursday's filing in Carson City for a rate cut came the same day Sierra Pacific Resources reported modest earnings for the quarter ending Sept. 30.

A rate cut decision is expected within 180 days - near the anniversary of a PUC decision last March granting about only about half the rate increase the company sought for power it bought in 2001 during a western energy crisis.

That ruling sent Sierra Pacific stock tumbling, generated concern about bankruptcy, prompted a ballot initiative about making the utility a publicly owned agency, and attracted a takeover bid from the Southern Nevada Water Authority.

Despite a $1.6 million Nevada Power public relations campaign, the Clark County advisory ballot measure passed 57 percent to 43 percent, sending the question to the Nevada Legislature next year.

Vince Alberta, water authority spokesman, said the rate cut request was expected, because Nevada Power is required by state law to lower rates when energy costs go down.

The water authority, the power company's biggest customer, is offering $3.2 billion to acquire Nevada Power, although executives at the Las Vegas-based electric utility have said the company is not for sale.

Alberta said the water authority offer remains on the table, "and we think it is still the best solution for the customers, the shareholders and the economic vitality of southern Nevada."

Tim Hay, state consumer advocate, said any rate cut is good for customers, but said he still favors a water authority takeover of Nevada Power.

"The numbers that we've heard are nothing compared with the numbers SNWA is projecting if it takes over Nevada Power," Hay said.

Alberta said that with the decline in energy prices, the water authority could offer an even bigger reduction than the 20 percent rate cut it projected when it made its takeover offer in July.

Sierra Pacific chief Walt Higgins, in a statement about the rate cut, acknowledged that Nevada Power still faces some big potential liabilities, including a $229 million lawsuit from an Enron Corp. subsidiary that claims Nevada Power improperly canceled energy contracts.

As part of its filing, Nevada Power will ask the PUC to increase rates by $1.9 million to compensate it for residential energy conservation and education programs.

New rates for Nevada Power's 640,000 customers would go into effect in May.