Court to decide who pays $437 million electric bill

Cy Ryan

Wednesday, Feb. 22, 2006 | 10:15 a.m.

CARSON CITY - State Consumer Advocate Eric Witkoski says Nevada Power Co. should refund $485 million to its ratepayers in Clark County.

Nevada Power maintains it should keep that money and collect another $437 million for power it bought during the energy crisis of 2000 and 2001.

The Nevada Supreme Court will hear the arguments Thursday in what is expected to be the last chapter in a four-year battle.

It's one of a few high-profile cases on the court's docket this week. Today the court is hearing arguments on the legality of a Las Vegas ordinance that prohibits erotic dancers from fond-ling customers.

During the energy crisis, Nevada Power spent $922 million to buy power for Southern Nevada. The Public Service Commission allowed the utility to recover $485 million from its customers but denied the other $437 million on grounds that the company did not prudently search for lower-cost options.

Witkoski said the utility departed from its prior practice of arranging for additional purchase of power for the summer, and that for 2001 it bought only a small backup supply. He said Sierra Pacific Resources, the parent company, was concentrating on buying Portland General Electric in Oregon from Enron Corp. and did not pay sufficient attention to acquiring power at a low cost.

The acquisition of Portland General never happened.

But Elizabeth Elliott, Nevada Power attorney, said the "energy markets were in crisis" at the time.

When the energy crisis hit, sending prices sky high, Nevada Power borrowed money in November 2000 to buy power, and "the lights stayed on in Las Vegas," she said. After the crisis ended, Nevada Power was left with substantial supplies of "above-market priced energy."

The company asked the PUC to collect the $922 million over three years from customers. But the PUC cut the request by $437 million.

"The impact was swift and severe," Elliott said. "Within hours of the vote, (Nevada Power's) credit status was downgraded to below noninvestment grade and its share price plummeted. Today the company credit status remains below investment grade."

Richard Hinckley, PUC counsel, said the state issued a "well-reasoned decision" in shaving the request in half. He said the management of Nevada Power "failed to sufficiently focus on the power procurement activities."

Hinckley said the company could have purchased energy from Merrill Lynch at $32-$39 per megawatt per hour, but ended up paying $420. Instead of purchasing early, Nevada Power "speculated it would buy power cheaper" in the future, he said.

In the Las Vegas case before the court today, erotic dancers are asking the court to uphold lower court rulings that an ordinance prohibiting certain types of touching is invalid.

A brief filed in the case last year said 170 cases are stacked up in Municipal Court awaiting a ruling.

In the erotic dancer case, Las Vegas is asking the Supreme Court to overrule Municipal Judge Elizabeth Kolkoski and District Judge Sally Loehrer, who found the ordinance invalid.

The city ordinance makes is a misdemeanor for an erotic dancer to "fondle or caress any patron" and it's illegal for any patron to fondle or caress any dancer.

Deputy City Attorney Edward Poleski maintains that the words "fondle or caress" are clear and the 9th U.S. Circuit Court of Appeals has found the terms are "not unconstitutionally vague."

Poleski, in addition, said Kolkoski does not have the authority to decide whether a city ordinance is invalid. The ordinance, he said, is aimed at stopping prostitution, lewdness and fraud.

Anthony Sgro, attorney for 14 erotic dancers involved in this case, said there's no definition in the law that defines "fondle or caress" at an adult nightclub.

"A dancer could be held criminally liable for simply shaking a customer's hand or gently brushing his chest or shoulder," Sgro wrote in his prehearing brief.

In addition, Sgro said, there has been selective enforcement - police arrest the dancers.

"In one case a male patron grabbed the breast of a female dancer. In her reaction the dancer pushed away the patron's hand and told him not to do it again."

He said the police witnessed the incident and charged the female dancer with a misdemeanor but did nothing to the male patron.

Cy Ryan can be reached at (775) 687-5032 or at cy@lasvegassun.com.