Sandoval’s pick of panel’s chairman considered test of independence

By David McGrath Schwartz

Friday, Jan. 14, 2011 | 2 a.m.

The chairman of the state’s Public Utilities Commission will resign this month, providing the first measure of Gov. Brian Sandoval’s independence from NV Energy, the powerful utility to which he has deep ties.

Commission Chairman Sam Thompson will step down from the three-member board Jan. 28.

The change on the commission comes as NV Energy seeks a 5 percent rate increase this spring and is expected to pursue another rate hike to cover the cost of building a $750 million power plant set to open this year.

When Sandoval campaigned for governor, some questioned how independent he could be from the powerful interests who have aided his meteoric rise in politics.

“The public should carefully scrutinize who replaces Chairman Thompson, given that the governor has represented shareholders as an attorney and his advisers have ties to NV Energy,” said Tim Hay, a former state consumer advocate.

(Hay’s term as advocate ended when Sandoval chose not to reappoint him following his election as attorney general.)

As a private attorney in the 1990s and 2000s, Sandoval represented a group of the power company’s shareholders when the utility went to court to raise electric rates.

His top informal advisers, Pete Ernaut and Greg Ferraro, are the two most powerful lobbyists for the utility.

Michael Yackira, CEO of NV Energy, sits on the governor’s transition team.

Thompson sent a brief letter of resignation to Sandoval on Jan. 3 that offered no explanation for why he was stepping down.

The governor did not ask for his resignation nor did Sandoval have a conversation with him during the transition, according to Dale Erquiaga, senior adviser to Sandoval.

Hay praised Thompson, whose term was to expire in September 2012, for balancing the interests of ratepayers and the utility. Thompson did not return calls for comment.

Nevada has some of the highest energy rates among Western states. Economic development advocates say that has hampered their efforts to recruit businesses and industries to the state, particularly those that are energy intensive such as manufacturing and data centers.

“In 2000, we had among the lowest power rates in the Western United States,” said Lance Gilman, marketing partner at Reno-Tahoe Industrial Park, which bills itself as the world’s largest industrial park. “Today, we have some of the most expensive power rates in the United States.”

He said there’s “no question” high energy prices have been a deterrent to businesses locating in Nevada.

NV Energy declined to comment for this story, saying it would be inappropriate to comment on who would replace the chairman.

Ernaut, however, said he suggested to Sandoval the name of a potential replacement for Thompson. He declined to divulge the name.

“Brian Sandoval is his own person. The suggestion that anyone would have undue influence on the governor is rather insulting on its face,” Ernaut said. Sandoval will “continue to take advice, as he should, and has made and will continue to make good decisions.”

Ernaut, a partner at R&R Partners (where Erquiaga used to work), helped persuade Sandoval to leave his lifetime appointment to the federal bench to run for governor. He was an unpaid, but key, strategist for Sandoval’s campaign.

“It stands to reason the governor would seek counsel from the industry in which people will be involved,” he said.

Sandoval has promised not to raise taxes, in part, because he said doing so would send a negative message to businesses considering moving to Nevada. He has said little, if anything, about the state’s high energy prices and their effect on economic diversification.

“Gov. Sandoval is very cognizant he represents all the voters of the state,” Erquiaga said. “He has not taken any steps that he favors an industry over an average citizen, whether as a legislator, a gaming regulator or attorney general. His record speaks for itself.”

The Public Utility Commission will, over the next year, decide major rate cases that could lead to higher energy bills.

NV Energy has asked for the 5 percent rate increase to make up for energy efficiency programs. Additionally, later this year it will ask the commission for a general rate case. Included in that will be how much ratepayers will be charged for the new $750 million power plant. That project, north of Las Vegas, was approved by the PUC in 2008.