UTILITY RATES: Electric bills will increase Consumer advocate denounces request approved by PUC

By JOHN G. EDWARDS REVIEW-JOURNAL

Citing concerns about Sierra Pacific Resources' financial viability, state regulators Friday unanimously allowed a record 17 percent, $300 million rate increase for the company to go into effect Thursday.

The state's consumer advocate, Tim Hay, who earlier this month said the rate request was not necessary, remains unconvinced and said he will consider seeking a court injunction to stop the action.

"I think the companies manufactured hysteria and thereby manipulated the commission," Hay said after the commission voted. "I think the utility (customers) of Nevada have a right to be outraged."

Commissioner Richard McIntire, however, said Nevada Power, which serves the Las Vegas area, and Sierra Pacific Power of Reno need the rate increase immediately to avoid financial disaster.

"We need to keep the lights on," McIntire said. "If we choose to suspend this (case for review), what we'll be doing is hearing it by candlelight."

The rate case decision came a day after Gov. Kenny Guinn unveiled a five-point strategy for dealing with the energy crisis. On Thursday, Guinn urged members of the PUC, whom he appoints, to reconsider their order forcing Nevada Power and Sierra Pacific Power to sell their power plants. He also announced a plan to provide water for four new power plants and indefinitely postponed retail power deregulation. The PUC will review the rate increase after it is implemented next week and could cut rates later if it decides all of the increase isn't merited.

Residential customers using 1,100 kilowatt hours will see their bills rise to $97.90 in March, which will include an extra $12.63 because of the latest rate increase and another $1.27 because of the continuing monthly fuel-cost adjustments, according to the Public Utilities Commission.

But a customer using just 400 kilowatt hours a month will pay only an extra 46 cents and will pay no additional rate increase as a result of the PUC's action Friday, according to the PUC.

Hay and Nevada Power offer slightly different opinions on what residential customers can expect in the summer, when electricity demand will be high because of air-conditioning needs.

Glenda McCartney, a Nevada Power spokeswoman, said Friday that the new rate increase will raise a typical residential customer's August bill by more than $50.

The typical customer paid $124.99 for power in August 2000 and will pay $178.34 in August this year, McCartney said. But, she also noted that electric power rates in Las Vegas are lower than those at comparable utilities.

Hay, however, said the average residential customer will pay an extra $60 more, or a total or $231, for power this August.

McCartney argued that Hay's number is skewed because of 130 large homes owned by wealthy Las Vegans, including celebrities.

Hay said the largest customers were more than offset by "thousands of extremely small residential users."

Hay disputed that the utility is in financial trouble. He said the utilities have access to more than $2 billion through a public financing that the PUC approved and $300 million from the sale of its water utility in Northern Nevada.

Sierra Pacific Resources, in fact, paid $20 million in dividends to stockholders in February, Hay said.

Hay also complained Friday that the PUC allowed the rate increase for Nevada Power and Sierra Pacific Power to go into effect without any hearings or comments from most classes of customers.

The consumer advocate earlier this month asked the commission to throw out the rate increase based on claims that it was illegal procedurally. The commission took no action on Hay's motion, but Jeff Parker, general counsel for the commission, said the rate increase was properly handled.

After the meeting, Walter Higgins, chairman and chief executive officer of the utilities' parent, Sierra Pacific Resources, said the utilities' ability to buy power and fuel to generate power was in jeopardy because of its financial plight.

"We were in danger of our checkbook running dry," Higgins said. "In fact, it would happen in a number of weeks."

Because of rising fuel and wholesale power prices, "we are losing money on every kilowatt hour that we sell now," Higgins said.

If the utilities had locked up wholesale power contracts for the next two years in July, they would not need the $300 million rate increase, Hay said.

Instead, the company allowed rates to rise before entering into contracts for the portion of power it cannot produce at its own generation plants, Hay said.

"Their power acquisition program was haphazard and ill conceived," Hay said.

http://www.lvrj.com/lvrj_home/2001/Feb-24-Sat-2001/news/15515274.html

-- Martin Thompson (mthom1927@aol.com), February 25, 2001

Answers

These wacky consumer advocates never believe anything detrimental can happen, through natural shortages and government boondoggling. They seem to believe only that all these energy problems are solely the result of greedy money grabs by wealthy capitalists.

Think any of them will ever wake up?

-- Billiver (billiver@aol.com), February 25, 2001.