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April 19, 2014

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Utilities commission chairwoman recommends NV Energy sale to Buffett

The chairwoman of the Nevada Public Utilities Commission is recommending approval of the sale of NV Energy to billionaire Warren Buffett.

Chairwoman Alaina Burtenshaw released a draft order today saying the $5.6 billion deal was in the public interest.

Included in her statement were recommendations that customers receive a $20 million credit on their bills, ratepayers not fund pay raises for senior executives of NV Energy for 24 months and that the new company investigate how to improve service to unhappy customers in the Las Vegas area.

The draft order will be presented to the full three-member commission Monday for final approval.

Buffett is buying NV Energy through his MidAmerican Energy Holding Company and plans to retain the present management of the utility that has 2.4 million customers.

NV Energy is the parent company of Nevada Power Company in Las Vegas and Sierra Pacific Power Co. in Reno. Sierra also provides natural gas to some consumers.

An agreement to protect consumers was reached previously by MidAmerican, the Nevada Consumer Protection Bureau, the staff of the PUC and NV Energy.

Under the plan, the $20 million credit to customers will break down to $13 for a residential customer in the Las Vegas area, $7 for those served by Sierra Pacific and $2 for natural gas users of Sierra Pacific. It will be credited in one monthly bill after the regulatory approval.

The agreement also says consumers will not have to pay $2 billion of the $5.6 billion purchase price, which was initially proposed by the companies.

Burtenshaw's proposed order says the commission must approve any future reduction in the workforce of NV Energy "other than the normal course of business or attrition or for the relocation of non-senior management personnel outside of Nevada."

During the hearings on the application, Burtenshaw said in her order, "NV Energy confirmed that Nevada Power has low rankings for customer satisfaction and has been aware of these low rankings for at least five years." Therefore, within six months of the sale, the companies will submit a plan to improve service to customers in Las Vegas.

The proposed order says neither NV Energy nor its subsidiaries will make any loans or transfer money without permission from the PUC, and there is a commitment that executives of NV Energy will meet with the commission 30 days before a legislative session to discuss plans by the utility to pursue a change in law.

According to Burtenshaw, the commission was not informed during the 2013 Legislature about some of the bills supported by NV Energy. The proposed order says there has to be "clear communications with regards to what might be going forward into the legislative session and to allow for open discussion about issues, concerns, potential solutions and things that might need legislative support."

Not part of this PUC order is an agreement between MidAmerican and the Sierra Club to retire three units of the Reid Gardner Power Plant run by Nevada Power Company before Dec. 31, 2014. Environmental groups and Indian tribes claim these coal-fired units have produced air pollution. The fourth unit at Reid Gardner will also be retired in the future.

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