Friday, Feb. 11, 2005 | 10:54 a.m.
Thursday morning's announcement that a legal truce has been called between Nevada Power Co., the Southern Nevada Water Authority and the Colorado River Commission was not good for everyone.
"It's a good day for everyone except the lawyers," said Rory Reid, chairman of the Clark County Commission and vice chairman of the Southern Nevada Water Authority -- and a lawyer.
Officials from the Water Authority and the Nevada Power agreed that by ending a lengthy legal feud millions of dollars will be saved for both organizations in mounting legal costs.
The "cooperative accord" ends a series of lawsuits and regulatory cases pitting the Las Vegas-based electric company against the SNWA and employees of the Colorado River Commission, the state agency which buys power for the Water Authority. Nevada Power had sued in March 2004, claiming that the SNWA, CRC employees and an employee of the notorious energy trader Enron Corp. had conspired to damage the electric company and its employees.
Among the other actions between the agencies that are now being halted was a CRC arbitration case against Nevada Power. The commission had argued to the Federal Energy Regulatory Commission that it had been overcharged by the electric company.
The new accord must still be approved by the boards of directors for Nevada Power's parent company, Sierra Pacific Resources, the SNWA and the CRC. If approved the agreement also would cause the SNWA to formally withdraw its 2002 bid to purchase Nevada Power.
Other elements of the deal would increase the cooperative dealings between the organizations, including quarterly meetings between executives and strategic partnerships to maximize utility resources.
"That's good news," said Richard Burdette, energy adviser to Gov. Kenny Guinn. "The message is pretty important and pretty clear ... Whatever money has been involved in the past is certainly less than the potential cost in the future of not working together."
Don Soderberg, chairman of the state Public Utilities Commission, agreed.
"Going in different directions was not good for their customers," he said.
As part of the deal, Nevada Power will operate SNWA's 25 percent ownership stake in the Silverhawk power plant north of Las Vegas. Last year, despite the legal feud, the SNWA had agreed to sell electricity to Nevada Power from the plant. The new eight-year deal will give the electric company more control over power generation resources. The Water Authority, in return, will get a firm power resource from the utility.
"This will help lower costs to customers of both companies," said Michael Yackira, chief financial officer of Sierra Pacific Resources. "It allows us to displace older, less efficient facilities ... They don't have to count on one plant to supply energy needs."
Under the deal, Nevada Power also will provide scheduling and balancing services for SNWA, assuring that there is sufficient power coming into the local grid in order to meet demand. That service was contracted out to Public Service of New Mexico in 2001 after conflicts arose between SNWA and Nevada Power.
It was that scheduling service that led to a March 2004 Nevada Power lawsuit that will be dissolved by the new deal.
In the suit, Nevada Power claimed the Water Authority and employees of the CRC and an Enron Corp. employee were misrepresenting 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.
George Caan, executive director of the Colorado River Commission, said having the scheduling duties returned to a local source will allow for better management.
"I'm personally very pleased to see Nevada Power take on this role," he said.
While the new arrangement shores up the relationship between the agencies, Pat Mulroy, general manager of the SNWA, and Walter Higgins, chief executive of Sierra Pacific Resources, said there will be no consolidation between the entities.
"Absolutely not," Mulroy said, adding that the organizations will both stick to their "core busineses."
The cordial attitude at the meeting was a distinct change from the heated exchanges between the parties in the recent past.
In a November court hearing, Jonathan Waller, an attorney representing Nevada Power, said 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 in November.
"Today we move forward," Mulroy said on Thursday.
The change in attitude was not lost on Reid, who has been credited for bringing the feuding executives together.
"You are probably not used to seeing them in the same room together smiling," Reid said.
Higgins described Reid's role in the talks that produced the accord as "our spiritual leader to get things going and keeping 'em going."
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