Sierra Pacific seeks boost in Northern Nevada rates

Tuesday, Dec. 2, 2003 | 11:04 a.m.

CARSON CITY -- Sierra Pacific Power Co. asked the state Public Service Commission Monday for permission to raise rates by $95 million, calling for an average 9.7 percent overall rate hike for its 350,000 customers in Northern Nevada.

The Reno-based utility wants to stagger the increase so the first $70 million becomes effective June 1, 2004, and the remaining $25 million in June 2005.

If approved, an average customer of the utility using a typical 715 kilowatt hours a month would see an increase of $8.65.

Sierra Pacific is asking for a return on common equity of 12.4 percent on its electric operations compared to the last authorized of 10.17 percent and an overall rate of return of 10.11 percent for its total operation, which includes natural gas service in the Reno area.

State Consumer Advocate Tim Hay said he has not had time to study the application but added the request for a 12.4 percent return "is quite excessive." He said the financial condition of Sierra Pacific is "impaired and (the company) wants the consumers to bail them out for poor management in the past."

Sierra Pacific must also file a rate adjustment Jan. 14 for to recover any increased cost of fuel it paid for its energy. But the company said it does not expect to ask for any net additional rate increases

Company president Jeff Ceccarelli said: "By delaying the implementation of a portion of our general rate request, we can lessen the impact on our customers and further stabilize rates."

The utility wants to include in its rate base $67.2 million the cost of a transmission line in the eastern part of the state to bring in an additional 225 megawatts of power to its customers.

Including the $67.2 million in the rate base would allow the company to recover the money from its customers while the construction is under way. The utility said the project would meet the expanding needs of its customers.

"(It) would provide cash to ameliorate construction funding requirements, thereby strengthening the company's financial position by reducing reliance on external financing," said Kathleen Drakulich, associate general counsel, who submitted the rate request.

Any motion to dismiss the application must be filed with the PUC within 15 days. Sierra Pacific said it expects the PUC to hold hearings in the spring on this application.

Sierra Pacific Power is the sister of Nevada Power Co. These two are the subsidiaries of Sierra Pacific Resources.

Hay said Nevada Power has pending applications to increase rates to Clark County customers by $432.9 million over three years in a general rate case. And it wants to recover $344.8 million in deferred energy costs to recoup money spent on higher energy costs. It also wants to recover $31.8 million for expenses in developing its resource plan.