Panel: Plant builders must contribute to Nevada Power project

Kevin Rademacher

Monday, Nov. 29, 2004 | 10:46 a.m.

Nevada Power Co.'s massive Centennial Project will get a financial contribution from two power plant builders that might never use the transmission system.

The Federal Energy Regulatory Commission this month ruled that Calpine Corp. and Reliant Energy Service Inc. must contribute to the cost of the project -- based on previous contracts with the Las Vegas electric company -- despite the fact that their power plant projects are either canceled or uncertain.

Reliant has dropped plans for its Arrow Canyon power plant at the Apex Industrial Park about 20 miles north of Las Vegas. Calpine has stopped efforts to build the Moapa Paiute Energy Center on reservation land, but has said that the project could be revived if it reaches a deal with Nevada Power to purchase the energy generated at the plant.

Both of the developers had transmission service agreements (TSAs) with Nevada Power, and claim that their contracts allow them to break the deals since the plans are in various states of inactivity.

Nevada Power argued to regulators that neither the TSA nor its Open Access Transmission Tariff allow the developers to unilaterally cancel the deals, and that the agreements can be canceled only "upon mutual agreement."

The utility also argued that if the developers were allowed to cancel "Nevada Power may have to require remaining Centennial Project transmission customers to pay an increased share of Centennial Project costs."

Connecting the two plants would fall into the second phase of the $300 million Centennial Project. The project was launched in effort to keep up with the demand of the growing Clark County population and to connect new power plants being built by both the utility and other so-called merchant power providers. The first phase of the project was completed in March 2003.

The second phase of Centennial will run a 50-mile transmission line between Harry Allen Substation at Apex to the Mead Substation near Boulder City.

FERC did deny, for now, Nevada Power's request for additional damages from the developers. Nevada Power had argued that the Centennial Project was designed to meet the its transmission customers and that state regulators approved a resource plan designed as such. Additionally, the utility said scaling down a project once it has been designed could create instability.

Still, FERC said that its decision was in the best interest of ratepayers.

"This order benefits customers by ensuring the development of new transmission facilities and infrastructure and alleviating congestion," the order said.