Consumer advocate files suit against state PUC

Friday, Aug. 8, 2003 | 11:28 a.m.

CARSON CITY -- State Consumer Advocate Tim Hay believes Nevada Power Co. is collecting at least $106 million too much from its customers in Clark County.

Hay filed suit today in Clark County District Court in Las Vegas against the state Public Utilities Commission that permitted the utility to recover $147.7 million of the $195 million it requested to cover the higher cost of fuel.

The suit said the decision by the PUC on May 13 this year was "erroneous in view of the substantial evidence in the record in this case and imposes on ratepayers costs that were imprudently incurred in violation of Nevada law."

The complaint said the commissioners, in reaching their decision, improperly talked about the financial condition of the company. The commission can only consider whether the additional fuel purchased was prudently acquired, the complaint said.

It said, "The substantial evidence in this record demonstrated that Nevada Power ignored its own strategy for purchasing of natural gas."

The suit asks the court to set aside the decision of the PUC and disallow any costs for fuel and purchased power that were imprudently incurred.

The decision of the commission combined with lower projected costs for future fuel and purchased power meant a 6.3 percent rate decrease the first year. That means a customer who used 1,250 kilowatt hours of electricity would save about $7.50 a month.

Hay said there should be a greater savings to the customer but added those calculations have not been made.

David Chairez, public information officer for the PUC, said, "The commission will defend any appeal of its May 2003 decision regarding the deferred energy case of Nevada Power just as it did the previous year when both Nevada Power and the Bureau of Consumer Protection sought judicial review of the commission's March 2002 deferred energy decision."

In the 2002 case, District Judge Bill Maddox of Carson City upheld the ruling of the PUC. The case is now on appeal to the Nevada Supreme Court.

Andrea Smith, director of corporate communications for the company, said it has not seen the complaint filed this morning and it "would be premature to make any comment."

PUC Commissioner Adriana Escobar Chanos, who presided at the public hearing on the case, had recommended to the full commission that $174.6 million be disallowed in costs sought to be recovered by Nevada Power.

But Commission Chairman Don Soderberg and Commissioner Richard McIntire disagreed with some of the findings of Escobar Chanos. Escobar Chanos suggested that $70.7 million be disallowed Nevada Power because it could have purchased its power cheaper from Merrill Lynch. But Soderberg and McIntire said the Las Vegas-based utility should be allowed to recover that $70.7 million.