Friday, Oct. 18, 2002 | 6:56 a.m.
WEEKEND EDITION: Oct. 20, 2002
Editor's note: A clash between two strong-willed executives, Southern Nevada Water Authority general manager Pat Mulroy and Walt Higgins, chairman of Sierra Pacific Resources, has cast both of them in the spotlight. Mulroy's water authority is seeking to acquire Sierra Pacific subsidiary Nevada Power Co. for $3.2 billion. The water authority, which is Southern Nevada's biggest consumer of electricity, maintains that financially strapped Nevada Power is no longer reliable and must be replaced. Higgins argues that the water authority bid is not financially sound and that there is no evidence that the public agency can run a power utility. Against this backdrop, Clark County voters are being asked in Question 14, an advisory measure on the Nov. 5 general election ballot, whether they would like to operate a public power utility. The water authority bid and the ballot initiative have made Mulroy and Higgins two of the biggest newsmakers in Nevada, and they are profiled in the accompanying articles.
Wearing a Chesire cat grin and rubbing her hands together, Southern Nevada Water Authority general manager Pat Mulroy contemplated her agency's $3.2 billion bid to acquire Nevada Power Co.
Responding in her normal deep, serious tone, Mulroy spoke as though the water authority had all the strong debating points on its side.
"This whole power thing is borne out of necessity," Mulroy said. "We are 100 percent dependent on the reliability of the power grid in Southern Nevada and in large measure on the ability of Nevada Power to build and develop the transmission lines and for the energy industry to provide the necessary generation."
Without electricity, there's no power to deliver water from Lake Mead to the Las Vegas Valley. And because Mulroy and her water authority colleagues don't believe Nevada Power is financially stable enough to provide that power, the public agency has offered to become the valley's power provider.
Anyone who doesn't take her seriously should be forewarned. At 5-foot-5, with short-cropped, thick blonde hair brushed back behind her ears, the blue-eyed Mulroy appears harmless enough. But get her talking about the bid to acquire Nevada Power from parent Sierra Pacific Resources and that deep, serious tone in her voice gets deeper.
"It's a charming battle and I'm enjoying it thoroughly," Mulroy said.
Doing battle is one of the things Mulroy, 49, does best. In the 17 years that she has spent making sure that water is delivered to thirsty Southern Nevadans, she has emerged as one of the state's most politically shrewd individuals.
Whether it was helping to pull together combative water districts to form the water authority, gaining votes on the state's Colorado River Commission or guiding the most expensive nonfederally funded public works project in Nevada history, Mulroy has a knack for winning big battles.
The water authority's bid to purchase Nevada Power has become one of those confrontations, though Mulroy now finds herself up against the equally strong-willed chairman of Sierra Pacific, Walt Higgins.
"We have different ways of looking at the world," Mulroy said. "He looks at what he does as a corporate enterprise. I look at, is it meeting social needs? Those are very, very different vantage points."
What's peculiar is that she has gotten where she has with an academic background in German literature and with virtually no grasp of water issues when she joined the Las Vegas Valley Water District as deputy general manager in 1985.
One of her former bosses and mentors, Colorado River Commission Chairman Richard Bunker, said Mulroy is totally focused on what she does.
"When she has a challenge in front of her she has the ability to shut other things out," Bunker said. "She has great ambition and the ability to go with it but she is basically without an ego. People will say she's driven by power but she's accomplished what she has by the people she surrounds herself with.
"She would do a 100 percent better job of running the power company than the ones currently doing it."
There is little in Mulroy's early background to suggest that she would one day manage the most important resource -- water -- in the fastest growing community in America.
Born Patricia Gallagher and reared in Germany as a U.S. citizen with an Air Force civilian father and German-born mother, Mulroy was deeply influenced by horrid tales of World War II that she learned from her parents. Her mother had been an aspiring young actress when German dictator Adolf Hitler closed down the acting schools in Munich and forced many performing artists to work for the Nazis.
"My mother and grandmother were forced to work censorship because they spoke multiple languages," Mulroy said. "So they had to read all the correspondence leaving and coming into the country during the war years."
Toward the end of the war, Mulroy's mother ran away from home upon reports that Russian troops were entering Germany and molesting women. She hid in a nearby forest with a group of foreign laborers and passed herself off as a French girl until rescued by the Americans.
"My mom suffered some real trauma during the war and never really adjusted well," Mulroy said.
Her father didn't have it much easier.
"My dad was among those who helped clean out Dachau, which left a real impression," Mulroy said, referring to the infamous concentration camp. "He'd wake up in the middle of the night screaming until the day he died."
During her youth, Mulroy spent brief forays away from Germany with her parents on Air Force business, including in Libya and in Virginia, where her father worked in the Pentagon. But she returned to Germany in fifth grade.
Though her mother mastered five languages, her father spoke only English and she spent much of her time with other English-speaking children of U.S. military personnel. Her perfect diction betrays no hint that she grew up in Germany, though she speaks German fluently.
Art of persuasion
It was during her high school years that Mulroy's innate talent to persuade others to side with her began to emerge. As a senior class president of a German high school populated by children of American servicemen, she convinced her principal to let the seniors have one day off per semester in exchange for participation in extracurricular activities.
Leadership, a role she also takes in her local church, "always came naturally," she said. "It's the understanding of people and the willingness to think outside the box and the willingness to take risks."
But she said it took her awhile to figure out how to win people over to her side.
"Probably the biggest asset, in my opinion, is listening, listening to what motivates the person you're trying to convince," Mulroy said. "If I can put myself in the other person's position, I understand their pressures, I understand their concerns, I understand what motivates them."
As a college student in Germany she studied German literature and its "thought-provoking stories" that were heavy on social discourse.
"Nothing taught me human nature more profoundly than reading as much as I did in college," she said.
It was during her junior year at the University of Munich that she began receiving American college credits through a program sponsored by Lewis and Clark University of Portland, Ore. A college executive at Lewis and Clark had a contact at UNLV who, in turn, offered her a full scholarship for her senior year with a guarantee of work as a teaching assistant.
She'll never forget her arrival in Las Vegas on Aug. 24, 1974. She described her first night as being in "total culture shock." Because she arrived on a Saturday night and couldn't check in to her dorm room until the following day, she was stuck in a motel room on the Strip.
"I had a vision of what a king-sized bed would be like but I never in my life had seen a round bed with a mirror in the ceiling," Mulroy said. "I walked into this room and it had this hot pink bed spread and red carpet that clashed.
"The next morning I wake up and open this little dinky window and I look out and I think, 'this is a moonscape.' I'm coming from Germany, where everything is green, very green, very lush, very wet, lots of clouds. And here there was blue sky and brown dirt and I thought I was on the moon."
Las Vegas grew on her slowly. She wasn't about to go back to Germany since it had long been a dream of hers to spend her adulthood in this country. So she made the best of it by making friends with other students.
"I assimilated into the culture and it was the only home I knew in this country," Mulroy said.
After receiving her bachelor's and master's degrees in German literature from UNLV, Mulroy attended Stanford University. But she returned to Las Vegas in 1978 before completing her doctorate because she needed to find work to help put her younger sister through college.
A UNLV classmate, Ardel Jorgenson, convinced Mulroy to join her in the Clark County manager's office, which was going through reorganization under Bunker, who was county manager at the time. Mulroy started as a low-level analyst who earned $13,000 annually, a far cry from the $191,237 she makes today.
"Probably my strongest skills are writing and oral skills," Mulroy said. "For me to write a speech I can do it with both eyes closed."
That ability shows in public appearances, where she can deliver rousing speeches and crisp responses to questions with few notes. There is an edge to Mulroy's delivery and she never has trouble expressing herself.
Jorgenson, now the county's business license director, said Mulroy was the type of bright and energetic "people-type person" the county was looking to hire.
"Knowing Pat over the years and her eagerness and tenacity to succeed, I'm not surprised one bit she's where she's at today," Jorgenson said. "She's very outgoing and a bundle of energy that never slows down."
Mulroy volunteered to work on the county manager's packet of proposed bills to be considered by the 1979 Nevada Legislature and thus her foray into the politics of government was born.
"She does not play games," Bunker said. "She does not play one commissioner off of another. What you see with her is what you get."
She rapidly became a county lobbyist in Carson City and a troubleshooter.
"What Richard Bunker taught me was calmness of temper," Mulroy said. "He taught me to never take people on their face value. You've got to know people a little better before you open up. Probably my biggest flaw is that I open up way too easily."
Mulroy worked in the county manager's office during an era when the mob still had a toehold in Las Vegas.
"I got to understand what made Las Vegas tick and watched it transition to what it is today," she said. "I've had a really interesting perspective on what power is and what power isn't, and how fleeting power is."
She found herself a part of the community's transition when she became the county's first Justice Court administrator in 1984. But she was stripped of many of her duties when the attorney general's office ruled that she could not tell the elected county clerk what to do, thereby reversing a county ordinance that had given Mulroy that authority.
Instead, she became a deputy general manager of the Las Vegas Valley Water District in 1985. She was offered the position because of her administrative skills and put in charge of finance and human resources.
"I knew nothing about water issues," Mulroy said. "But the issues that were facing the water district had to do with organization building. There was a huge internal problem at the water district at the time and there were political issues. I found that water is 75 percent politics."
When water district general manager Patrick Pine resigned in 1989, Mulroy beat out 150 applicants for the top post. By then the Las Vegas Valley was beginning to experience rapid growth, and Southern Nevada water districts were squabbling among themselves over water.
"In 1989, when everything started falling apart, when growth exploded, we were seeing all of a sudden not 4 or 5 percent increases in water use a year," Mulroy said. "We were seeing 17 to 22 percent increases in water use.
"At the same time we were making peace with the local entities here we needed to find additional water supplies. We knew conservation was always going to be a key component but at the rate we were growing we were not going to conserve our way out of this problem."
In order to allow Southern Nevada communities to achieve a unified front on water issues rather than battle each other as individual purveyors, Mulroy helped create the Southern Nevada Water Authority in 1991. Mulroy, named general manager of the water authority in 1993, took command of an organization whose members include the cities of Las Vegas, North Las Vegas, Henderson and Boulder City, as well as the Big Bend and Las Vegas Valley water districts and the Clark County Sanitation District.
"The biggest job I had was to be non-threatening," Mulroy said. "As you can well imagine the Las Vegas Valley Water District was the 800-pound gorilla. It had 80 percent of the service territory. It had all of Las Vegas and Clark County. So the three small cities, Henderson, North Las Vegas and Boulder City, were terrified. With the political might of the combined city and county, this was the consolidation they always dreaded.
"Everything we could do to shed that big guy image is what we had to do or we never would have reached agreement. The smallest entity had to be as important as the largest entity."
It was not enough to form an authority, however. In order to ensure that Southern Nevada would receive its fair share of Colorado River water, Mulroy -- with an assist from Bunker -- helped convince Gov. Bob Miller and other state lawmakers to give the authority three of the seven votes on the state's Colorado River Commission.
The commission is supposed to represent Nevada among the seven states -- including California, Arizona, Colorado, Utah, New Mexico and Wyoming -- that share the Colorado River. Since Nevada's allocation goes primarily to Southern Nevada, Mulroy said it was only fair for the authority to have a voice on the commission.
"We were paying 100 percent of the bill for the commission and had no voice," Mulroy said. "This allowed Nevada to speak as one voice."
By "one voice" Mulroy means that the water authority and its constituents are now able to help determine the state's policy when it comes to Colorado River issues, rather than sit on the sidelines.
Tough sales job
But Mulroy's toughest sales job was to help convince the public to finance a $2.1 billion expansion of Southern Nevada's water treatment and delivery system designed to meet community needs through 2025. Clark County voters in 1998 overwhelmingly approved a quarter-cent sales tax increase to help finance the expansion but it took substantial planning by Mulroy and a committee of business, financial and engineering advisors beginning in 1994 to reach that point.
One who has been impressed with Mulroy's guidance of the ongoing construction project is Robert Lewis, a prominent local home builder and president of Lewis Operating Corp., a real estate developer. Lewis, who served on that committee and others involving water issues, said he is most impressed with the way Mulroy and her staff prepare when pitching water projects to the business community.
"Her staff is very well prepared and they clearly document what the problem is," Lewis said. "She has been able to attract and retain some of the best people in government. They open the door to us so we get to come to the table. For the $2 billion project, they drove us out to Lake Mead. They put us on a bus and said, 'We'll show you what we need.' "
The massive construction project has been held up by the water authority as evidence that it has what it takes to build the necessary facilities needed to run a power company. The project is $60 million under budget so far and is scheduled to continue through 2014 as needed.
But water authority critic and retired architect Ken Mahal, president of the Nevada Seniors Coalition, said it was an error for the agency to add a second intake straw near the old one, which is about six miles downstream from where treated sewage and Las Vegas Wash runoff is dumped into Lake Mead.
"The whole project was supposed to be about safety," Mahal said. "But they put the new intake right next to the old one."
Mahal's criticism extends to Mulroy herself, suggesting that her lack of an engineering background is why she should resign. Mahal is participating in television advertisements encouraging county voters to oppose Question 14, the advisory measure that asks the public whether it wants Nevada Power replaced by a nonprofit electric provider.
"Pat Mulroy has done exactly what the power structure wants her to do," Mahal said. "But she has no technical expertise whatsoever. She and her staff ought to resign. There ought to be a civil engineer that knows that business running the water authority instead of off-the-street bureaucrats who don't know what they're doing."
But Mulroy surrounds herself with civil engineers and is not afraid to hire individuals who are at least as smart as she is, Bunker said.
When Mulroy appeared Wednesday on "Face to Face With Jon Ralston" on Las Vegas ONE, a joint partnership of the Las Vegas Sun, Cox Communications and KLAS Channel 8, the feisty side of her personality came out when she referred to anti-Question 14 arguments as "all lies."
In response to the anti-Question 14 argument that the water authority lacks experience to handle electricity issues, she told Ralston:
"We don't have experience in continually raising rates. We don't have experience in not building facilities that need to be built. We don't have experience breaking our word. What we do have experience in is building $2 billion worth of facilities without raising water rates, with making a promise and keeping our promise, with building our facilities on time and under budget."
Solving sticky issues
Mulroy has displayed a knack for solving sticky issues, such as how to pay for the water expansion project while balancing the interests of current and future customers.
What was agreed upon was that existing customers would share the cost of improving water treatment and making the delivery system more reliable, but with commercial users paying more than residential consumers. Expansion of the water system to accommodate growth would be paid substantially by buyers of new homes through increased hookup fees.
"Once the financing plan was put together it was our job to sell it," Mulroy said. "Every user group paid for the system to the extent that they derived a benefit from it. Water rates and connection charges were going to have to pick up the piece that the sales tax couldn't pay for. That was the selling job. The difficulty was the fear of taxes."
Assemblyman Harry Mortenson, D-Las Vegas, recalled following Mulroy at a number of gatherings where she spoke in favor of the sales tax and he argued in opposition.
"Pat Mulroy is a very good administrator, a very capable lady and an extremely hard worker," Mortenson said. "I learned that in the quarter-cent sales tax fight. She was always ahead of me and I was running to catch up.
"I have nothing against her but I am worried about how she seems to be a fanatic about keeping water use to a minimum. I don't know where her marching orders come from but I think they come from people who want the valley to grow, grow, grow. If you want to save water, stop the migration of 5,000 people a month into the valley."
Mulroy, who is married and has two teenage children, is a "soccer mom" who unwinds by attending youth sporting events, hitting the ski slopes, reading and listening to classical and oldies rock and roll music.
At work, she spends considerable time searching for ways to get more water into the valley. One of those "thinking out of the box" solutions was to allow Nevada to bank its excess allotments of Colorado River water in Arizona's deep aquifers.
The banking agreement, approved in July 2001, will allow Nevada to use "credits" from the groundwater bank when it needs more water by pumping that amount of water out of the river. Arizona will then be able to pump an equivalent amount of the groundwater for itself and therefore take that much less from the river.
Another issue of concern to Mulroy has been the reliability of energy to make sure that Southern Nevadans get their water. It's a primary reason why the water authority, the largest user of electricity in Southern Nevada, has become focused on attempts to purchase Nevada Power.
"If the power grid goes down, there's no water," Mulroy said. "Electricity goes off, taps go dry. It is an absolute, essential part of us being able to do our business and it's going to increasingly become important as water quality gets tied to ever more energy-demanding treatment methodologies."
Acquiring Nevada Power, she said, is akin to having the water authority control its own destiny. She said Nevada Power, which has a battered credit rating and is struggling financially, "is not equipped to deal with the issues that are facing this community, both in the short term and, quite frankly, in the long term.
"I believe that because of the reliance that the community has on its power supply, it has the same desire to effectuate planning for the future of the power supply that it does for its water supply. Renewable energy has to be a piece of the future as much as conservation has to be apiece of the future."
Mulroy badly wants to meet with Higgins in person to discuss the water authority bid, but a scheduled debate on Ralston's show fell through when attorneys advised Higgins to pull out. Mulroy wound up appearing alone and was asked by Ralston what she thought of Higgins' decision to cancel his appearance.
"Either the company is engaging in some kind of a manipulation to try to influence the price or the company truly doesn't want to have to deal with this offer and they're simply stalling for time to get past the election and get to the Legislature," she said.
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