Sunday, May 27, 2001 Copyright © Las Vegas Review-Journal

ELECTRICITY CRISIS: 'I guess I won't eat'

People living on limited incomes face difficult choices as the mercury rises

By GLENN PUIT and JOHN G. EDWARDS REVIEW-JOURNAL

Eighty-year-old Elizabeth Sterling worries about getting her July and August power bills.

Sterling, who lives alone in a tiny apartment and survives on a monthly income of about $650, said she doesn't know how she is going to pay those bills when the temperature hits 118 degrees outside.

"I guess I won't eat," said the resident of Schaffer Heights, a Clark County Housing Authority subdivision for seniors off East Desert Inn Road.

Just as concerned is Sandra Zaitz, who lives in a mobile home near Nellis Air Force Base.

Zaitz, 59, is the primary provider for her 2-year-old grandson, Tanner. The waitress makes roughly $30,000 a year and has no idea how she will pay her power bills when they rise above $200 a month in July and August.

"We'll be robbing Peter to pay Paul," she said. "What are you going to do? You can't fight the power company."

Sterling and Zaitz are examples of the Nevadans who will suffer the most this summer because of the power price increases that have occurred over the past year.

Seniors with little money could find themselves in a potentially deadly dilemma as they avoid using air conditioners to save money, some officials say.

"We talk a lot of quality of life, but when we are talking about our power crisis in Nevada, we are talking about life itself," said Assemblyman David Goldwater, D-Las Vegas. "This is a public health issue and seniors are at risk."

Typically, July and August are the hottest months of the year in Las Vegas, translating into the highest months for energy consumption. An average household consumes about 2,268 kilowatts of power in July and about 2,485 kilowatts in August, according to Nevada Power.

Given those numbers, state Consumer Advocate Tim Hay figures that last year the average consumer paid a power bill of about $149 in July and $171 in August.

Factoring in the Nevada Power rate increases, those bills for July and August will go up about 40 percent, or an additional $60 per summer month.

Even though the wealthy are not facing any life-and-death situations because of the power cost increases, they also are concerned.

In southwest Las Vegas, real estate magnate Ropchai Premsrirut and his wife, Somphool, live in a 10,000-square-foot home.

The Premsriruts, who also own of Prem Pediatrics, are what you would call well-to-do, but that doesn't mean they aren't concerned about their rising power bills. With six air conditioning units and temperature control monitors in their luxurious home, they are facing a likely July power bill of at least $1,100, including taxes. Last year, their July bill was about $750.

"No matter what your income level, you get used to your lifestyle," said Premsrirut, a retired UNLV economics professor. "If the (prices) change very fast, people feel the effects."

According to Nevada Power, the rate residential customers pay for energy in Nevada increased every month from last summer until April, when the rates were capped by the state. Since September, the basic rates have increased nearly 16 percent, according to the power company.

However, that figure does not necessarily represent the percentage increase customers will be paying for power this summer. Under a three-tiered rate scale, those who use more electricity will pay a higher rate than those who use less power, according to figures provided by the Public Utilities Commission.

For example, those who consume only 500 kilowatt hours will see an increase of 18.7 percent on their bill, while those who use 2,500 kilowatt hours will face a 41 percent increase.

The crisis was blamed on the deregulation of California's retail electricity market.

It was also blamed on poor planning. The economies of California and Nevada have been surging, but neither state has seen a major power plant built in the past decade.

Contributing to the problem is the fact that Nevada Power, like every other utility in the country, doesn't have enough generating capacity to supply all the electricity it needs during the summer, so it must import electricity from out-of-state suppliers at prices that have been driven up by high California demand.

It's simple economics.

"We are in a situation where wholesale costs for fuel and purchased power have spiraled out of control," said company spokeswoman Helen O'Reilly. "Even with our small, incremental purchase power raises, the price charged to consumers is way below what we are paying for the product."

Right now, the largest consumers of power are charged about 9 cents per kilowatt hour. On the competitive wholesale markets, the company is paying 70 cents to $1 per kilowatt hour during peak hours of the summer months, said Nevada Power administrator Arnold Lopez.

With residents facing increasing power bills this summer and for years to come, the state in April capped further rate increases until early in 2002 and also halted the planned deregulation of the power industry in Nevada.

In spring 2002, Nevada Power expects to be granted a rate increase of $450 million to $700 million for additional power and fuel costs, according to Mark Ruelle, chief financial officer for Sierra Pacific Resources, the holding company for Nevada Power.

When the 2002 rate increases do eventually hit, they may be spread out over three years, allowing Nevada Power to recoup its losses over time.

"That would translate into a very substantial increase for Nevada ratepayers," Hay said.

Nevada Power said the state's intervention was necessary.

"We think the governor, the Legislature and the Public Utilities Commission have all worked very hard to put some protections in place for the consumer," O'Reilly said. "It was courageous for them to do that."

All of that is of little comfort for Las Vegans worried about surviving this summer's heat.

Sterling, a Las Vegas resident since 1944, lives on her $514-a-month Social Security check and a $140-a-month union benefit. With this, she must pay her reduced rent and her gas, her water and food costs.

"They give you just enough to get by," Sterling said. "I have a hard time paying the bills. I need a raise."

Sterling is on the low end of the energy consumption scale.

An analysis of her power bill by Consumer Advocate Hay shows that last August she paid about $82 to Nevada Power. This August, her bill will be closer to $105.

For most people, that may not seem like that much money, but for Sterling it's huge.

"You learn to live with what you've got," said Sterling, who has no doubt she will survive the summer despite her predicament. "I've been around long enough."

A few apartments away from Sterling lives 69-year-old Gary Rogers, who is only slightly better off than his neighbor.

Rogers suffered a stroke 12 years ago, leaving him with no use of his right arm and limited use of his right leg. He lives in a barren Housing Authority apartment where there is no couch, no art on the walls and only sparse groceries in the refrigerator.

He relies on a monthly Social Security check of $799.

"It's pretty tough," Rogers said. "I've got eight kids, 15 grandkids, and I can't even buy them a Christmas present."

Rogers said life will get even tougher when the power bills come this summer.

He paid about $97 for power last August. This August his power will run about $125.

Clark County Coroner Ron Flud said Las Vegas has largely escaped the heat-related deaths that have plagued other cities because of the high costs of power, but that might change.

"It is a reality that may come out of this," he said.

As part of his state budget, Gov. Kenny Guinn has pledged $5 million to help low-income consumers pay their bills. A spokesman for the governor said last week the exact amount is pending approval by the Legislature.

Sierra Pacific has agreed to match the $5 million figure.

Goldwater has introduced in this year's Legislature a bill that would implement an assessment estimated at 40 cents per month to residential users' power bills. The legislation would also charge major industrial users, such as mines and casinos, to fund the proposal. High-volume consumers would pay more.

Goldwater said the measure would raise about $10 million a year, and about 75 percent of that money would help the poor pay their utility bills. The remaining 25 percent would be used to weatherize low-income homes to lower energy consumption.

The bill has passed the Assembly, but Goldwater predicts a fight in the Senate. If the bills fails, he said lawmakers won't realize their mistake until this summer.

"When summer comes there will be the horror stories," Goldwater said.

The Salvation Army offers about $500,000 a year in payment assistance.

Also, Gustavo Ramos Jr., deputy executive director of the county Housing Authority, said the authority is teaming up with Nevada Power to reimplement what is called a load management program at the authority's complexes. The program, which was offered valleywide about a decade ago, is not yet being offered in other parts of the valley.

The program, which is voluntary for residents, involves installing a box that is wired into air conditioners. The box regulates consumption by slightly increasing an air conditioner's "down time," leading to lower power bills.

Residents who use the box are expected to receive a cash dividend from the company to help with their utilities.

"They are already struggling," Ramos said of low-income residents. "This will be a tremendous benefit to have Nevada Power working with them like this."

But for people like Zaitz, there is no relief.

She makes about $2,500 a month. That is just enough to cover the $365-a-month space rent for her mobile home, a $300-a-month car payment, a $30 gas bill, a $25 water bill, and at least $400 a month in grocery bills.

Part of her dilemma is that she always keeps her poorly insulated double-wide mobile home at 79 degrees or cooler in the summer, meaning she consumes roughly 2,400 kilowatt hours in August. She said she is forced to keep it that cool because she is caring for her grandson.

Last summer, her power bills were roughly $154 for July and August. This summer, those power bills are expected to rise to about $212.

"I keep it cool for him, and I hate the heat," Zaitz said. "It makes me feel like I'm going to die."

Premsrirut said he believes the state's decision to cap power rates is a good first step to addressing the problem.

"The government has to control it," he said. "We are not ready yet for (deregulation)."

This story is located at: http://www.lvrj.com/lvrj_home/2001/May-27-Sun-2001/news/16116505.html

-- Martin Thompson (mthom1927@aol.com), May 27, 2001