Tuesday, Sept. 16, 2003 | 11:14 a.m.
The efforts of four large electric customers to leave the Nevada Power Co. system could be halted in a state Public Utilities Commission hearing Wednesday afternoon.
A draft order released by the PUC this morning recommends rescinding an earlier ruling by the commission that would have allowed MGM MIRAGE, Station Casinos, the Monte Carlo hotel-casino and the Fashion Show Mall to leave the system and buy electricity from Nevada Power competitors.
The draft order cites the inability of those customers to finalize details in their contracts spelled out in the PUC's initial ruling. The draft order is expected to be voted on by the commission in a Wednesday afternoon meeting.
Nevada Consumer Advocate Tim Hay said bringing the process to a halt would be the best move to protect Nevada ratepayers.
"It's been a fairly difficult task trying to balance the interests of departing customers with the health of the (Nevada Power) system and the remaining customers," Hay said.
"I'm not sure if at this point we would have adequate assurances that the remaining customers would not be paying a disproportionate share of the costs of the system," he added. "It's probably a good time to take a pause and look at some of the issues in greater detail."
Attorneys for the departing customers have argued that allowing the departure would reduce Nevada Power's peak summer demand by 167 megawatts. Since the Las Vegas utility purchases about 60 percent of it electricity on the wholesale market, the customers argued that it would reduce costs for the remaining customers.
Steve Boss, president of Nevada Energy Buyers Network, which is representing Station Casinos and Fashion Show, said the draft order was disappointing, but he said he remained hopeful that the commission could vote differently Wednesday.
"Obviously we are disappointed," he said. "A lot of work has gone into these transactions. We would have liked to have seen a way to interpret the statutes and regulations in a way that was flexible enough to allow these four to proceed."
The exiting customers have struggled with two key contract details required by the commission.
Regulators said the deals did not meet provisions that called for 30 percent of the summer peak power to come from generation facilities inside the local system.
That provision, Nevada Power has argued, is needed to prevent potential blackouts because the transmission system does not have the capacity to import enough electricity to serve those customers during peak summer months.
Exiting customers have argued that, with only two local plants selling wholesale electricity, the market does not have the generation capacity to meet that requirement.
Regulators also questioned the lack of contract provisions that allow Nevada Power to buy 10 percent of the total contract amount at identical terms.
The exiting customers have argued in turn that such a provision can't be initiated until a contract is finalized. Deals, however, can't be finalized without assurances from regulators that they will be allowed to leave the system, the customers said.
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