Business news briefs for April 1, 2004

Thursday, April 1, 2004 | 11:19 a.m.

Casino, utility agree to connection deal

The state Public Utilities Commission on Wednesday approved a deal between The Rio hotel-casino and Nevada Power Co.

The deal will allow The Rio to put into service a 4.92-megawatt, $7 million combustion turbine power plant on the hotel site. The plant is expected to generate about 40 percent of the resort's power load.

The plant must be connected to Nevada Power's local distribution grid, and Nevada Power must still provide the balance of the resort's power as well as backup power in the instance of a plant failure.

The Rio also will benefit from the use of heat generated by the plant to provide 60 percent of the property's heating needs. The plant is expected to be complete this month.

The PUC also approved an order allowing Nevada Power to issue $230 million in long-term debt. Of the offering, $130 million will be used to pay off notes that mature this month. The additional debt would be used to supplement the company's cash flow.

Tech firms protest change

SAN FRANCISCO -- The technology industry Wednesday loudly protested a proposed accounting change that would force companies to count stock options as an expense.

The change, proposed by the Financial Accounting Standards Board, asks companies to deduct option costs from earnings. Option costs must be now footnoted in financial reports but do not have to be deducted. FASB, a non-government group that sets accounting rules, will take comments until June 30. It hopes to issue a final rule by the end of this year. The change would then be phased in.

Expensing options would "provide more complete, more transparent information to investors," says FASB spokeswoman Sheryl Thompson. But tech trade groups say expensing would hurt earnings, stock prices and the ability to compensate employees.

"We're going to use bad math to erase real earnings," says Jeff Peck of the International Employee Stock Options Coalition, a trade group.

Tech firms grant more options than any other. Start-ups use options as most of employee pay, and former start-ups such as Cisco Systems and Intel still give them.