Lawmaker pushes takeover of Nevada Power

Thursday, March 13, 2003 | 11:05 a.m.

CARSON CITY -- Sen. Joe Neal wants to allow talks to begin immediately for the Southern Nevada Water Authority to buy Nevada Power Co. in Las Vegas.

But a spokeswoman for the utility reiterated Wednesday that the company is not for sale.

The 2001 Legislature enacted a law that a governmental body could not acquire a private utility until at least July 1, 2003. Neal introduced Senate Bill 261 Wednesday to advance that date to March 1 this year so negotiations could begin immediately.

He said he wants the Senate Commerce and Labor Committee to hold a hearing in the next few days so the legislation can be processed quickly.

"Right now Nevada Power Co. will not talk to the Southern Nevada Water Authority because we have a law on the books that says they can't be sold before July 1 to a public entity," Neal said.

An advisory question on the November 2002 election showed 58 percent of Clark County voters favored the takeover of the utility.

The stock of the company has been declining, Neal noted. The stock of Sierra Pacific Resources Co., the parent of Nevada Power, closed Tuesday at $3, down from a 52-week high of $16.65. It traded early this morning at $2.96.

Judy Stokey, a lobbyist for Nevada Power, said the company would not fight to extend the July 1 deadline. But she reiterated that Nevada Power is not for sale.

The board of directors of the water authority voted to offer $3.2 billion for the purchase of the utility last summer.

Hours after Neal introduced his bill, Sen. Randolph Townsend, R-Reno, issued a statement supporting Nevada Power and its sister Sierra Pacific Power Co. of Reno.

Townsend said the utilities have been the target of unfair criticism from East Coast financial institutions and he wanted "to set the record straight." He added his statement had nothing to do with the Neal bill.

Townsend, chairman of the Commerce and Labor Committee, said he has been critical of the two companies but said they did a "remarkable" job in 2001 when the energy crisis hit.

While California suffered through rolling blackouts, the two Nevada companies kept the lights on, he said.

"The costs were high, sometimes too high," he said. "But homes and hospitals in Nevada received continuous service throughout."

"(It is) important for us to now provide Nevada Power and Sierra Pacific with the tools and support to succeed in order to re-emerge from this difficult period stronger and better prepared to meet their future obligations," Townsend said.

Townsend also said his statement Wednesday afternoon had nothing to do with Nevada Power's upcoming hearing before District Judge Bill Maddox in Carson City. On Friday Nevada Power's lawyers will argue that the utility was entitled to the full $922 million rate increase it requested but saw chopped nearly in half by the state Public Utilities Commission in March 2002.

The utility, which serves 625,000 customers in Clark County, said it spent the $922 million on extra power and fuel during the energy shortage and sought to recover that amount, but the PUC cut the rate increase to $485 million.

The utility sued, but so did consumer advocate Tim Hay. Hay maintains that the PUC should not have granted any rate increase because the utility did not use reasonable purchasing practices in buying the fuel.

The Southern Nevada Water Authority, meanwhile, is recommending that the PUC-approved rate increase be lowered by another $90.8 million. The water authority maintains that the power company was not prudent when it entered into a fixed price for purchase of gas. Instead it should have purchased gas over time, thereby reducing risk associated with price volatility, the water authority claims.