PUC denies it made missteps in rate case

Kevin Rademacher

Monday, March 22, 2004 | 11:10 a.m.

The state Public Utilities Commission is disputing claims by state Consumer Advocate Tim Hay that regulators mishandled a Nevada Power Co. rate case.

A Hay lawsuit claims that PUC Chairman Don Soderberg and then-commissioner Richard McIntire erred in the handling of deliberation in a $195 million case finalized last year.

Fellow Commissioner Adriana Escobar Chanos recommended disallowing the utility's recovery of $180 million. Soderberg and McIntire supported and eventually passed a much smaller $47 million disallowance.

Hay's suit seeks to have the entire $180 million disallowed. In questioning the PUC's ruling he pointed to a meeting McIntire had with Walter Higgins, chief executive of Nevada Power's parent company, Sierra Pacific Resources following a 2002 rate case disallowance. He said that meeting "violates the spirit" of Nevada law.

Also criticized in Hay's lawsuit were Soderberg's comments during the deliberations regarding the possibility of bankruptcy on the part of the utility if another large disallowance was ordered. Hay said those comments, since they were not part of formal testimony in the case, were improper, adding that the financial health of the company should not be considered in determining the prudence of the company's actions.

State law only allows utilities to recover costs incurred in the prudent management of the company.

The response of the PUC, filed this month, characterizes Hay's motion as a distortion of the facts.

"Trying to shoe-horn this case to match the law, (Hay) engages in gross mischaracterizations," the brief said. "(Hay) misleads the court in these statements."

The PUC's response indicates that while some of the same facts in 2002 led to a large disallowance, the commission was not bound to make an identical finding in 2003.

"The new issue of prudence of power purchases for 2002 was not adjudicated until this case and references to 'identical factual issues' are plainly wrong," the brief said.

In a separate Nevada Power issue, the utility last week filed a brief with the Federal Energy Regulatory Commission on the alleged dubious relationship between the Colorado River Commission and notorious energy trader Enron Corp.

Roberto R. Denis, vice president of energy supply for Nevada Power Co., said contested contracts between the Las Vegas utility and Enron be thrown out based in part on malicious trading activity uncovered in CRC trading tapes.

"Enron -- in conjunction with CRC-- intentionally, willfully and with malice engaged in a pattern of fraudulent and anticompetitive dealing to profit from abuse of the market," his testimony said.

FERC has previously upheld those deal, and a bankruptcy court last year ruled that Nevada Power and its sister utility -- Sierra Pacific Power of Reno -- owe $336 million in termination payments based on those deals.

Denis also testified that the CRC should be ordered to disgorge all profits made by "gaming" the local markets. He said CRC "claims to have benefited SNWA in the amount of $12.8 million for calendar year 2000, and projected benefits for calendar year 2001 at $20 million."