Taking steps to ensure Nevada does not fall prey to the”financial and operational chaos” of the California energy market,Sierra Pacific Resources introduced an emergency package ofproposed long-term contracts, tiered price increases, low incomeassistance and conservation programs to stabilize energy markets inNevada.

Under a plan filed last week with the Public UtilitiesCommission of Nevada, utility subsidiaries Nevada Power and SierraPacific Power proposed short-term price increases from 0% forcertain low electricity usage customers, to as much as 29% for thestate’s largest power users to correct imbalances between the costof wholesale power and retail prices. On average, the company saidcustomers will see a 17% rate increase on their electric bills.

“Nevada, despite a good energy policy, is not immune from whatis happening in California” said Walt Higgins, CEO of SierraPacific Resources, at a news conference yesterday in Las Vegas.”This situation is unprecedented, unanticipated and potentiallydisastrous for Nevadans if we do not exercise the leadership ittakes now to correct these imbalances in supply and demand andbetween cost and price. No business can continue selling a productfor less than it costs them to buy it on the wholesale market.

“We know any rate increase is painful, but there is no escapingthe fact that the consequences of inaction are much more severe tothe residents and businesses of this state, as California clearlyshows. Nevadans simply cannot let the lights go out with the kindof irresponsible inaction we’ve witnessed over the hill. Even withthis increase, our rates will still be lower than in California,”Higgins said.

In the plan, the companies set out a program to meet the state’sshort- and long-term energy needs, looking toward new mechanisms torecover the soaring cost of wholesale power, which will immediatelydecrease when prices fall. Sierra Pacific Resources petitioned thatnew power plant development be looked into, and that long-termpower contracts be given accelerated approval. The plan alsoprovides assistance for low income families and businessesattempting to manage their total energy costs.

Nevada Power customers who use 400 kWh or less per month, andSierra Pacific customers who use 300 kWh or less per month wouldsee no change in their rate from the proposed plan, the companysaid.

During the conference, Higgins also supported Nevada’s ease-inapproach toward electricity deregulation. “The Nevada legislatureand commission have shown a lot of foresight in how to handleenergy deregulation in the state, and there is no reason to gobackward,” said Higgins. “What we need is to continue forward butin a way that clearly anticipates the impact of market forces inthe state.”

The utilities proposed for the new mechanism to take effect onMarch 1, 2001, and be adjusted on March 1, 2002, or sooner toreflect a drop in wholesale prices.

“We are losing millions and millions of dollars now and it willget much worse if this plan is not adopted. We stand to losehundreds of millions more because the caps on price increases arekeeping rates artificially low. When the settlement was negotiated,no one expected prices for fuel and purchased power would continueto skyrocket to unheard of levels,” Higgins said. “We’ve saved over$30 million in operating efficiencies since the SierraPacific-Nevada Power merger, but we simply do not have the sameability to control $1.5 billion annually of fuel and purchasedpower expenses in an energy marketplace that’s gone haywire.”

Alex Steis

©Copyright 2001 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.