State analysts say Nevada Power being inconsistent

Kevin Rademacher

Tuesday, Dec. 9, 2003 | 10:58 a.m.

Frequent claims of possible bankruptcy on the part of Nevada Power Co. could come back to haunt the utility in its $142 million rate increase request currently before the state Public Utilities Commission.

Nevada Power in October asked the commission for permission to raise rates in phases, beginning with a 3.4 percent hike on April 1.

The balance of the increase, if the company's request is granted by regulators, would go into effect on Jan. 1, 2005. That portion of the increase would be offset by the expiration of a 2001 rate increase, creating no visible increase for customers.

Under that plan, the utility would recover about $50 million in 2004 and another $92 million in 2005.

In a brief filed with the commission on Monday, PUC staff members said the delayed rate increase is contrary to the utility's claims that it has been on the verge of insolvency since the 2000-2001 Western energy crisis.

"The concept of staggered implementation is is inconsistent with Nevada Power's constant allusions to imminent bankruptcy over the past three years," David Noble, assistant PUC staff counsel, said in the brief. "While Nevada Power may believe it is doing a service to customers by reducing the immediate impact on them, it would ultimately be a disservice if Nevada Power files for bankruptcy protection as a result."

When the rate case was filed in October, Nevada Consumer Advocate Tim Hay said the staggered implementation was a gimmick to make it more palatable for regulators to approve a larger rate increase.

In another brief filed Monday, Hay argued that the PUC has no legal grounds for approving a staggered collection method, an argument echoed by Noble.

Kathleen Drakulich, associate general counsel for Nevada Power, countered in the utility's own brief that there is no legal barrier to such a request.

"Nowhere in governing regulations or statutes is there a prohibition against allowing the phased-in implementation of rates or the deferred collection of revenue requirement that are otherwise deemed to be just and reasonable by the commission," she said.

Hay also pointed out that staggering the increase puts an undue burden on consumers moving into the Las Vegas Valley in 2005, who will then be paying for costs that would have otherwise been collected in 2004.

"The unusually transient nature of the population of (Nevada Power's) service territory makes this request particularly inequitable," Hay said.

The Nevada Coalition of Commercial Energy Users -- which includes St. Rose Dominican Hospitals, Sunrise Hospital and Medical Center, University and Community College System of Nevada and Paradise Development Corp. -- and the Utility Shareholders Association of Nevada also argued in favor of the staggered implementation plan.