Nevada Power, Water Authority to announce cooperative agreement

Kevin Rademacher

Thursday, Feb. 10, 2005 | 10:37 a.m.

Nevada Power Co., the Southern Nevada Water Authority and the Colorado River Commission are scheduled to announce a "cooperative business accord" today.

Officials with the organizations involved would not comment on the subject of the meeting, but it could bring to an end a nearly yearlong legal battle over dealings during the Western energy crisis of 2000-01.

Nevada Power filed a lawsuit in March 2004 against the Water Authority and employees of the CRC and an Enron Corp. employee, claiming that Nevada Power was deceived about the commission's energy needs. That scheme led the utility to buy and sell energy based on false information, causing "Nevada Power and its customers significant economic losses," the lawsuit said.

In a November court hearing, an attorney for Nevada Power said damages could run as high as $25 million. Translated into electric rates, that amount would equal about $1 on the average Nevada Power bill, said Richard Burdette, energy adviser for Gov. Kenny Guinn.

Also named as defendants in the original lawsuit were individuals George Caan, executive director of the CRC; Gail Bates, the commission's deputy director; William D. Miller, the commission's former chief energy trader; Timothy Clemens, Miller's assistant; John M. Evans, the SNWA's chief electrical engineer; and Paul Choi, an Enron employee during the energy crisis.

The CRC is a state agency that purchases power for the SNWA.

In November, U.S. District Court Judge Clive Jones granted a motion by the Water Authority to dismiss Nevada Power's lawsuit, but he left the door open for the Las Vegas electric company to continue its case.

Jonathan Waller, an attorney representing Nevada Power, said in a court hearing that the case was about a conspiracy to damage the utility.

"We are talking about an attempt to hijack our property and destroy our company," Waller said during the hearing.

In court, Waller also pointed out that the actions were taking place at the same time that the SNWA had made an offer to buy the utility, which was facing a financial meltdown amid fallout from the Western energy crisis.

Ultimately, Jones granted the motion to dismiss the lawsuit, but told Nevada Power it could refile the case if it more thoroughly spelled out the details that made the case suitable for federal court instead of the Federal Energy Regulatory Commission, which presides over rate disputes.

"The judge is saying 'I think there is something there,' " Peter McNulty, another Nevada Power attorney on the case, said at the time. "We just need to plead it better."

In August, the CRC announced that it will pay nearly $1 million to settle a Federal Energy Regulatory Commission investigation into the agency's trading practices and association with Enron.

The settlement included no admission or finding of wrongdoing, and CRC executives said the settlement was reached in an effort to save the cost necessary to continue litigating the matter.

"We view this as a sound business decision," Jim Salo, special assistant to the director of the CRC, said at the time.

The $996,145 payment represents the revenue the CRC received through trades involving Enron. Those trades involved sales into the California power market during 2000-01. Salo said there was no conspiracy with Enron, and that the notorious power trader was involved merely as a conduit with the market authority to trade in California.

"We totally deny there was any kind of conspiracy," he said.

When that settlement was announced, Nevada Power President Pat Shalmy said the deal furthered the utility's case.

"Obviously, we see this as a signal of wrongdoing on the part of the CRC," he said in August.

Despite the legal wrangling, Nevada Power and the SNWA have managed to strike some productive agreements over the past year.

In October, the SNWA's affiliate agency -- the Las Vegas Valley Water District -- approved a $22.6 million contract for the development and construction of a 3.1-megawatt solar energy plant.

As part of the project, Nevada Power Co. agreed to a 20-year contract to buy so-called renewable energy credits from the Water District. Over the life of the contract, Nevada Power will pay about $20 million to the Water District for the credits, which will help the electric company meet its state-mandated Renewable Energy Portfolio Standards.

In May, the SNWA announced that it would sell peak summer power generated by the new Silverhawk power plant north of Las Vegas to Nevada Power. SNWA owns a 25 percent stake in the plant.

In exchange Nevada Power will provide backup power and off-peak power to the Water Authority.