Nevada Says No to Sales of Generating Plants

April 1, 2001

Nevada Says No to Sales of Generating Plants

Nevada officials this week rushed through measures designed to stop the sale of power plants by Sierra Pacific Power and Nevada Power with a total value estimated at $1.7 billion.

The Assembly voted unanimously to pass Assembly Bill 369, which halts the plant sales and stops restructuring. The measure passed by a 40-0 vote on March 27.

In a special meeting March 29, the Public Utilities Commission of Nevada followed the Legislature's lead. The PUCN voted to suspend its October order approving Nevada Power's sale of its interest in the Mohave Generating Station in Laughlin, Nevada, to AES [00-8029].

State officials believed AES was preparing to close on the $123 million purchase of Nevada Power's 14 percent, 200 MW interest in the Mohave Generating Station and wanted to act fast on the matter.

The commission suspended the order for 60 days or until a final decision in the matter. It also may extend the suspension.

The three-member regulatory body was acting on a petition from Tim Hay, chief of the Attorney General's Bureau of Consumer Protection [01-3033]. He welcomed the decision, saying it would give lawmakers and others time to evaluate the proposed plant sales. He wants to retain the Mohave interest for the benefit of Nevada ratepayers because it burns coal, a low-cost fuel.

AES and others have pointed out that Mohave needs extensive improvements and whoever ends up owning the plant will face the financial burden of the upgrades. As if to underscore the point, one of two units at Mohave was shut down on March 28, when an electrical cable caught fire. The other unit had gone down on March 19, when failure of electrical equipment caused an outage. That problem was corrected, and the unit began operating again within a day, according to Southern California Edison, another company that owns an interest in the plant.

Nevada lawmakers have been working on a variety of other electric energy measures.

The Assembly Select Committee on Energy on March 26 introduced AB 66, which encourages use of green power and requires hearings before rate increases. Committee chair Doug Bache (D-Las Vegas) pushed for including a provision that would make PUCN members run for office instead of being appointed by the governor. The bill also calls for deferred energy rate cases, in which the utilities would seek to recover any past increases in fuel and wholesale power costs at regular intervals. At the request of consumer advocate Hay, the bill requires utilities to seek a general rate case review of all aspects of finances and operations by September 1.

"We do not want to hurt the company's considerably precarious financial position, but we also do not want rate increases imposed without [regulatory] scrutiny," explained Assembly majority leader Barbara Buckley (D-Las Vegas). The bill also creates a trust fund for renewable energy and provides for net metering at residences.

The committee also heard testimony on AB 418, which calls for gradually increasing green power use by the two electric companies to 15 percent. Two days later, the Senate Commerce and Labor Committee heard some of the same witnesses discuss a similar measure, SB 372.

The measures, drafted by former consumer advocate Jon Wellinghoff, require Nevada's two investor-owned utilities to buy 5 percent of their power from solar, wind, geothermal and biomass sources by 2002. The requirement would increase by 2 percent every two years until it reaches 15 percent.

The requirement would also apply to alternative sellers if the state opens the power industry to retail competition in the future.

Representatives of Sierra Pacific Resources opposed both bills but said they advocated renewable power in general.

Mike Smart, vice president of resource management at Sierra, complained the measures were "so much, so quick, so fast." Nevada Power and Sierra Pacific Power are now required to use renewable power sources for 0.2 percent of their sales.

Smart said the company was concerned because the bill allows the PUCN to fine the utilities $10,000 a day or a total of $3 million for failing to buy the required amount of renewable power.

Senator Bob Coffin (D-Las Vegas) is pushing SB 309 in order to create funding for emergency pumps on the motor-fuel pipelines that provide virtually all of those fuels used in Las Vegas and the Reno area. Coffin wants the pumps to be ready in case California blackouts interrupt pumping on the lines. He proposes bond financing for the $20-$30 million needed to buy the emergency pumps, which could run on diesel. "It's cheap insurance to keep our economy going," Coffin said.

A slew of other bills are also wending their way through the legislative maze, including SB 514, which would give the PUCN authority to stop acquisitions by Sierra Pacific Resources.

In a separate matter, the PUCN held hearings on March 29 and 30 to consider the staff proposal that Southwest Gas refund $8.1 million to customers because of allegedly imprudent gas purchasing practices [00-10070].

The one-time disallowance would trim the second of three purchased-gas adjustment rate increases this winter. In that PGA case, the PUCN raised rates by $19.7 million effective January 1.

The disputed purchases were made between June and September 2000. Southwest Gas contends its purchases were prudent, based on the best information available at the time [John Edwards].