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October 24, 2014

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NV Energy seeking reorganization to avoid federal regulatory oversight

NV Energy, which serves 1.3 million customers in the state, is proposing a corporate restructuring to avoid oversight by the Federal Energy Regulatory Commission.

This application is separate from the $10 billion sale of NV Energy to firms controlled by billionaire Warren Buffet.

NV Energy says its reorganization is needed when the 231-mile transmission line tying Las Vegas into a substation near Ely is completed by the end of the year. It would allow Nevada Power Co. in Las Vegas and Sierra Pacific Power Co. in Reno to exchange electricity.

The two companies, subsidiaries of NV Energy, are not currently able to trade power. But when the transmission line is completed and they are able to, the federal agency views this as “affiliate transactions” subject to its regulations on the rates and audits and other costly regulations.

The utility says the potential FERC entry into the picture would result in “potentially costly and cumbersome safeguards” to comply with the federal regulations.

Right now, the utility answers only to the Public Utilities Commission.

Under the proposal, Sierra Pacific would be merged into Nevada Power and renamed NV Energy Operating Company, which would be exempt from federal regulations regarding the exchange of gas.

There would still be divisions in the south and north.

At their meeting Friday, the PUC decided to hear the case Feb. 19. Consumer sessions — during which the costs and reported benefits would be available for ratepayers to comment on — have been tentatively scheduled for the week of Jan. 6, both in Las Vegas and Reno.

A decision by the PUC is expected by the end of March.

At the end of 2012, Nevada Power served 855,805 electric customers in the Las Vegas area. Sierra Pacific had 326,612 electric users and 153,530 natural gas customers.

According to promotional materials, the transmission line would spur the development of numerous renewable energy projects and result in energy-sharing efficiencies.

Great Basin Transmission South will own 75 percent of the transmission line and NV Energy will hold 25 percent. But NV Energy will have rights to 100 percent of the line’s capacity.

The PUC also tentatively set Dec. 2 for a hearing on MidAmerican Energy Holding Company to buy NV Energy.

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