Nevada Power rebates planned

Kevin Rademacher

Friday, June 27, 2003 | 12:03 p.m.

Nevada's share of a $1.6 billion settlement with El Paso Corp. is getting smaller, but it will arrive faster, the state consumer advocate said after new details of the deal were announced Thursday.

When the deal was announced in March, Consumer Advocate Tim Hay estimated that the Nevada consumers would receive as much as $65 million in the settlement. That number now is expected to fall to about $48 million.

The deal settles claims from parties in Nevada, California, Oregon and Washington that the Houston-based company manipulated natural gas prices during the Western energy crisis.

Hay said the deal could mean rebate checks early next year for Nevada Power Co. customers of about $20, but final details of a disbursement plan are "far from complete," he added.

Electric customers would receive the benefit because most of the disputed gas was sold for use in power plants, Hay explained.

There could more checks rebate checks in the works as the same states work toward a similar, and possibly larger, settlements with other distribution companies, including Sempra Energy.

"This could begin what we hope will be a stream of payments," Hay said.

Much of the original El Paso settlement amount would have been paid to consumers over a 20-year period. The new terms of the deal give the state $16 million up front with another $32 million paid over the life of the settlement.

"Originally, only about $2 million would have been paid up front, enough to cover costs and fees," Hay said. "This will allow us to give some sort of refund to consumers right away.

"One of our goals in these negotiations was to get more payments front-loaded."

Some of the settlement details benefitting, in part, Nevada consumers include El Paso's deposit of $250 million into an escrow account for the settling parties within 180 days of signing the final agreement. That payment will be done in lieu of payments of $22 million a year for 20 years,

El Paso also will issue of about 26.4 million shares of stock on behalf of the settling parties and will pay $45 million a year over a 20-year period instead of delivering natural gas to the California border as originally discussed.

The deal must receive final approval from California Superior Court and the Federal Energy Regulatory Commission. Approval is expected by early 2004.

In April, Nevada Power and its parent company, Sierra Pacific Resources, filed a federal fraud lawsuit in Las Vegas seeking $600 million from several natural gas providers, including El Paso Corp.

At the time, critics said the private suit would put the state's El Paso settlement at risk.

Those fears appear to have subsided.

"We believe that whatever has been done here is independent of the lawsuit," Hay said.

El Paso spokeswoman Norma Dunn agreed that the lawsuit should not affect the settlement.

"When we negotiated with the attorney general of Nevada, we understood that he worked on behalf of the citizens of Nevada," she said.

Nevada Power's suit, which is still pending, claims El Paso Corp., Sempra Energy, Dynegy Holdings and their subsidiaries participated in restraint of trade, fraud and a conspiracy, allegedly driving up natural gas prices between 1996 and 2001.

At the time of the settlement, Peter McNulty, an attorney representing Sierra Pacific, said the suit and the settlement are "separate and independent acts."

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