Goodman criticizes secrecy of deal between utilities

Kevin Rademacher

Friday, Feb. 18, 2005 | 11:10 a.m.

The succession of smiling faces touting the recent peace plan between Nevada Power Co., the Southern Nevada Water Authority and the Colorado River Commission came to an abrupt end Thursday morning.

At a SNWA board meeting, Las Vegas Mayor Oscar Goodman, a member of the board, ripped the fact that he and other members were unaware of the details of the monthslong negotiation until a news conference was called last week announcing the truce.

Ultimately, the board unanimously approved the cooperative accord between the parties, but not until after Goodman and other board members expressed their displeasure.

"This may be a great deal ... but I'm very concerned that our system of government has been abused as a result of the way this process has taken place," Goodman said. "The electeds, with the exception of some of us, were kept out of the loop."

Fellow SNWA board members, including North Las Vegas City Councilwoman Shari Buck and Clark County Commissioner Lynette Boggs McDonald, also expressed concern.

"I must say I agree with Mayor Goodman," Buck said during the meeting. "I have a problem with getting my information from the media (about the agreement). There really was no reason for this board to have no information about what was going on."

Clark County Commission Chairman Rory Reid has been credited for herding the parties through the discussions that produced the deal. Reid, vice chairman of the SNWA board, said the negotiations never would have taken place without the promise of confidentiality.

"I think this is a very unique circumstance," he said. "This couldn't have been done any other way ... I think that judgement was a good one."

Goodman indicated that the lack of involvement was particularly disconcerting given the difficult history between the SNWA and Nevada Power.

"In the three years, four years I've been on this committee, I've been told not to like Nevada Power Co.," he said. "Now, if I read the agenda correctly, I'm being told to like Nevada Power Co."

The agreement settles a long-running feud that escalated in 2002 when Nevada Power Co. and its parent company, Sierra Pacific Resources, saw their credit rating fall to junk status after the Public Utilities Commission refused to allow the company to recover from ratepayers more than $400 million spent on high priced power during the 2000-01 Western energy crisis.

While Nevada Power warned of possible bankruptcy, the SNWA made a $3.2 billion offer to buy the local utility.

A year later, Nevada Power was making legal and regulatory claims that SNWA, the Colorado River Commission and Enron had conspired to damage the electric company.

The CRC also had filed and arbitration case against Nevada Power with the Federal Energy Regulatory Commission, claiming that it had been overcharged by the utility.

The new deal ends all pending legal and regulatory action -- as well as the takeover offer. Officials from the Water Authority and Nevada Power agreed that by ending the feud, millions of dollars will be saved on both sides in mounting legal costs.

Reid and SNWA General Manager Pat Mulroy emphasized that the deal merely establishes an outline for formal agreements that are currently being finalized. The details of those agreements, which are expected to include a variety of collaborative efforts, will be brought before the board for final approval.

"They are going to have documents containing hundreds of pages of language to memorialize the specifics of this," Mulroy said after the meeting.

Goodman cast his vote in favor of the accord only after he received assurances that those details will be brought before the board.

Reid said after the meeting that the board was involved as soon as it was appropriate.

"There was no reason for the board to be involved until there was something for the board to consider," he said.

In addition to mandating executive meetings and settling litigation, 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.

Also part of the deal, Nevada Power will operate SNWA's 25 percent ownership stake in the Silverhawk power plant north of Las Vegas. The eight-year deal will give the electric company more control over power generation resources. The Water Authority, in return, will get 75 megawatts of firm power resources from the utility.

Additionally, 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 is currently contracted to a New Mexico utility.

Pat Shalmy, president of Nevada Power, said Thursday that the Sierra Pacific Resources board had already approved the accord, pending SNWA approval. The CRC board is expected to approve the accord at a March 8 meeting.

Some of the specific agreements, such as power plant operations, also will likely need the approval of the state Public Utilities Commission.