Lawmakers lobby FERC on utility’s contracts

Kevin Rademacher

Friday, June 25, 2004 | 10:47 a.m.

After failing to receive a response to two previous letters, Nevada's full congressional delegation is again lobbying the Federal Energy Regulatory Commission to review contracts the state's electric companies had with disgraced Enron Corp.

On Wednesday, Sens. Harry Reid and John Ensign and Reps. Jim Gibbons, Shelley Berkley and Jon C. Porter all signed a letter directed to FERC Chairman Patrick Wood demanding the commission take action.

Nevada Power and its sister utility, Sierra Pacific Power of Reno, owe Enron more than $330 million in termination payments awarded in a July 2003 U.S. Bankruptcy Court decision. Months earlier FERC had ruled that, despite findings of market manipulation on the part of Enron and others during the 2000-01 Western energy crisis, the long-term contracts were valid.

The bankruptcy court ruled that only FERC had jurisdiction over the contracts.

The Nevada companies have since been trying to get FERC to review its decision on various grounds with no answer from the federal regulators.

"Your agency's primary mission, entrusted to you by Congress through the Federal Power Act, was to protect our ratepayers from Enron's illegal activities," the letter said. "The commission failed in that duty. The fact that Enron continually attempts to seek $330 million from Nevada's utilities through bankruptcy proceedings is simply incomprehensible to us."

The letter also points to controversial trader tapes uncovered by Nevada Power.

The quotes included in the new letter -- "I want to see what pain and heartache this is going to cause Nevada Power Co." and "I want to f... with Nevada for awhile." -- have received national attention in recent weeks. While the letter from the Nevada delegation attributes the comments to Enron, the utility has said that the quotes, while in a conversation with an Enron trader, were made by a power trader from the Colorado River Commission.

Pat Shalmy, president of Nevada Power applauded the letter.

"I think this is about the third letter they have sent," he said. "We are very pleased with the consistency of the support we have gotten ... I think FERC is going to have to pay attention to this."

Similarly, Donald Soderberg, chairman of the state Public Utilities Commission, supported the efforts. The PUC also has supported Nevada Power's efforts to turn back the Enron decision.

"Sen. Reid and the Nevada delegation are right to be outraged," Soderberg said. "I appreciate their efforts to set right an obvious injustice."

In other Nevada Power news, Standard & Poor's on Thursday described the utility's announcement that it intends to purchased an unfinished power plant from Duke Energy Corp. as a positive development for the Las Vegas utility.

The 1,200-megawatt plant is about 20 miles north of Las Vegas and will be purchased -- if approved by the state Public Utilities Commission -- for $182 million. The company will spend about $376 million, to complete it in time for the summer of 2006.

The acquisition, Standard & Poor's said in a release, has a capital cost of $481 per kilowatt, substantially lower than the $840 per kilowatt that the company had previously proposed for a 520-megawatt plant it planned to build. Nevada Power is expected to ask the PUC to have that plant replaced in its resource plan by the Duke project.

The new capacity also will be available a year earlier than the current alternative, resulting in the utility being largely self sufficient in capacity except in the months of May through September, the report said. Nevada Power will have capacity to meet about 50 percent of its peak summer load, the release said.