Utility seeks to recover $115.9 mil.

Kevin Rademacher

Tuesday, Nov. 16, 2004 | 10:47 a.m.

Nevada Power Co. on Monday asked the state Public Utilities Commission for permission to recover $115.9 million from its customers.

The company also proposed delaying the collection of the $115.9 million until April 2006 in an effort to "mitigate the impact of increasing fuel prices on customers," said the company's application.

The Las Vegas-based utility has requested permission to recover the balance over 22 months. That means that during the yearlong delay, a portion of the $115.9 million -- about $40 million -- will accrue interest, which also will be paid by customers.

Interest will pile up at a rate based on the company's overall rate of return, which was set by the PUC this year at 9.03 percent. Michael Yackira, chief financial officer for Nevada Power's parent company, Sierra Pacific Resources, said that the actual interest rate applied will be about 8.5 percent, based on calculation anomalies.

Ultimately, he said the interest charges over the year would likely be about $3 million.

"When the effect is stable or lower rates for our customers, I think it's a cost worth paying," Yackira said.

In its rate case request, which incorporates an earlier petition the company made with the PUC, Nevada Power asked to have an old rate case balance extended from January to March. At that point, the old balance would expire and be replaced with another previously approved, but smaller, balance, providing a 1 to 2 percent rate decrease for all customer classes on April 1.

That would reduce average residential monthly bills from $122.33 to $121.18 until the newly requested balance is instituted in April 2006.

Included in those rates is a requested $85 million increase in the base-tariff energy rate -- which is designed to cover future costs for fuel and power needed to serve customers. If that rate is set accurately, it would mean little or no need to collect additional revenue next year.

Yackira said soaring natural gas prices have made setting the BTER difficult in recent years.

"If you would have asked me a year ago if we would be underrecovered, I would have said maybe, but I would have guessed maybe by $30 million or $40 million," he said.

If the plan to delay recovery of $115.9 million is rejected by regulators, and the recovery begins in April 2005, residential rates are expected to jump 7.56 percent, the company's filing said. Non-residential customers would see rates jump by 9.02 percent.

"Nevada Power management has worked hard to develop proposals with the intention of providing our customers the most stable rates possible and not subjecting them to frequent and unnecessarily large increases and decreases," Pat Shalmy, president of Nevada Power, said in a statement.

Nevada Consumer Advocate Tim Hay has not seen the rate filing Monday evening, but he said juggling the various old deferred balances with the new request "sounds suspicious."

He also said the announcement of a possible rate decrease should not dilute the fact that the company has asked for a large recovery.

"That's another fairly big chunk of money," Hay said of the request.

The amount Nevada Power is seeking in the so-called deferred energy rate case represents unrecovered costs for fuel to operate power plants and electricity bought on the open market between Oct. 1, 2003, and Sept. 30, 2004.

Nevada Power is not allowed to earn a profit on fuel and purchased power. The costs are passed on to customers on a dollar-for-dollar basis.