Las Vegas Sun

March 28, 2024

CRC releases tapes in Nevada Power case

A vote of the Colorado River Commission on Monday made public audio recordings and documents that Nevada Power Co. said implicates the agency in a conspiracy to damage the electric company.

The information covers energy trades the commission made during the Western energy crisis, some with the bankrupt Enron Corp.

At the root of the dispute, the commission and Nevada Power have an agreement to give and take power in order to keep the local distribution system in balance. George Caan, executive director of the commission, said that during a five-week period in April and May of 2000, a commission trader was draining the system in order to sell power through Enron into the California market.

Caan apologized to the utility for the actions, saying "It was not good utility practice."

He added that the actions were discovered in May 2000 and halted immediately. In October 2000, both parties, he said, signed a settlement in which the commission paid Nevada Power $18,000 to cover the dispute. In order to resolve other imbalances, Nevada Power paid the commission $250,000.

"This is something that's done all the time," Caan said of the balancing transactions.

Beyond those five weeks of trades, Caan said he has no idea what Nevada Power has been looking for in its months-long investigation.

"As far as I know, we settled it at that point," he said.

Attorneys for Nevada Power have reviewed the documents as an intervenor in a Federal Energy Regulatory Commission hearing into the energy crisis. J. Russell Campbell, an attorney investigating the commission for the utility, said those transactions were just the beginning.

"It's part of what we are looking at," Campbell said. "(Caan) is right when he said that one instance was caught ... but that was not the end of the story."

Following the settlement, Campbell said the commission began dumping excess power into the system, causing a positive imbalance. That, he said, damaged the company by causing Nevada Power to sell off energy below market costs. Campbell played tapes allegedly from August 2000 and January 2001 that contained comments from a commission trader boasting about overloading the system.

"We were shocked at what we heard," Campbell said.

Caan, however, said he did not understand complaints of dumping excess power into the system. He said the utility's tariff agreement protects Nevada Power from such actions.

"Nevada Power has the option taking the energy or telling us to take it back," Caan said.

He added that, after the dispute over shorting the system, the commission over-compensated to prevent further disputes.

"When we settled the issue when they were complaining about negative imbalances, we made the decision to always be positive," Caan said. "Now, they are raising the issue of overloading the system. You can't always match loads and resources."

Campbell said the company has not fully digested the scope of the alleged damage the commission caused Nevada Power and its ratepayers.

Any damage the commission caused the California energy markets will be determined by the Federal Energy Regulatory Commission. Nevada Power is expected to file a brief with the commission on its findings this month. That move would then allow the River Commission to investigate the utility in an effort to respond.

Now that the commission has lifted the confidentiality protection, the details of the tapes and associated documents also can be used in a separate Nevada arbitration proceeding between the parties. In that case, the commission has claimed it is owed $4 million from Nevada Power to clear balancing accounts. The utility is claimed it is owed $1 million from the commission. Campbell indicated that the findings on the tapes could change that total.

"We paid them $10.5 million over a year and a half (in 2000 and 2001)," he said. "We don't think we should have paid them anything."

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