Monday, March 10, 1997 | 11:59 a.m.
CARSON CITY -- The last thing that 83-year-old Ruby Burton needs is shocking news about her investments.
Like many senior citizens, Burton, a Las Vegas widow, has bought thousands of dollars worth of utility stocks -- in her case, as much as $60,000.
The thinking behind such stock buys is that the electric companies, which don't face competition, are a safe bet for small-time investors hoping to build on to their nest egg -- nothing major, just a little juice to give the retirement years a radiant glow.
But those investors might be in for a jolt. Their sure-fire stock purchases could be short-circuited by hair-raising changes in the electric industry.
Legislators this session are faced with crafting a law allowing out-of-state power companies to begin competing against the monopolies that have operated in Nevada for more than 70 years -- Sierra Pacific Power Co. in the northern part of the state and Nevada Power Co. in the south.
The move toward competition is occurring nationwide and is expected to be required by Congress by the turn of the century.
The Legislature's chore is to ensure that ratepayers and shareholders aren't burned by the changes.
While state regulators are saying they will work to safeguard shareholders, many investors regard competition with a measure of anxiety.
Now that the monopolies will have to learn how to compete, Burton is among those wondering if she should unload the stock, in case it dips.
"I've been told to get rid of it," Burton said. "I don't know which way to jump."
Her concerns mirror those of other investors, many of whom are, like her, retired.
According to the Nevada Utility Shareholders Association, 64 percent of Nevada Power's shareholders are over 60 years old. Fifteen percent are widows or widowers, and 60 percent are retired. The median age for Sierra Pacific shareholders is 64.5 years.
Fred Davis, a retired lobbyist for the Reno Chamber of Commerce, is another utility investor trying to understand what's going on.
"As a shareholder, changes are a concern," Davis said. "I'm doing my best to find out what the implications are. Historically, it's been a very safe investment. But nobody really knows what to expect."
Even the legislators dealing with the issue are somewhat in the dark.
"We're not sure what technology and competition hold in the marketplace," Sen. Randolph Townsend told utility investors last week at a luncheon in Carson City.
Townsend, R-Reno, chairs the Senate Commerce and Labor Committee, which is helping shape utility policy.
Townsend has said he will push for a test program beginning this summer, using 6 percent of the customers in Clark County, because that's about how fast Las Vegas is growing.
That will give legislators who serve in the 1999 legislative session a better idea of the effects of competition, he said.
"We want to see how it works in the real world," he said. "Forget what we have on paper."
In New Hampshire, a pilot program demonstrated that ratepayers could save 15 percent on electricity bills.
If that happened in Las Vegas, residential rates would drop from an average of $70.84 a month to $60.21.
Detractors of deregulation are concerned that rates will go up over the long haul, especially after casinos and mines strike sweetheart deals with private companies and leave everyone else to fend.
"I don't know much about competition, but I know we'll have to pick up the tab," Nevada Seniors Coalition lobbyist Thelma Clark has said.
Legislators this session are also struggling to figure out what role the Public Service Commission will play, if any, in regulating competitive companies.
Serious discussions on that issue and more should begin around March 17, when a PSC bill setting up guidelines for dealing with competition is expected to be introduced in the Assembly Commerce and Labor Committee, chaired by Assemblyman Doug Bache, D-Las Vegas.
For investors, the upcoming legislative debate had better focus in large part on stock portfolios. Critics, however, say anyone who invests in stocks knows ahead of time there are risks.
Jim Tarpey, regional director of Enron, a Houston-based energy conglomerate, said the move to competition has been publicized for years, and most attentive investors should have seen it coming.
"If government were to automatically say these were the new rules and everybody got caught off guard, then that would be the royal treatment," said Tarpey.
As for long-term investors, they don't have a complaint because they bought their stocks at a lower price, Tarpey said. Even if they sold now, they'd be making a profit, he said.
While acknowledging this argument, Townsend said the protection of shareholders is high on his list of priorities.
One way he'll strive to do that, he says, is to ensure that investors don't get stuck with so-called stranded costs.
That means every ratepayer's bill, as it does now, will include construction projects that were begun when the monopolies had free reign.
Another way to protect shareholders is to guarantee that regulation is in place during the transition, said Public Service Commissioner Judy Sheldrew.
"The Legislature by proclamation can't say competition exists," Sheldrew said. "Regulation is necessary to protect" ratepayers and shareholders.
Burton, a retired court reporter whose salary topped out at $40,000, began buying Nevada Power stock in the late '60s, shortly after she moved to Las Vegas.
"It was in my back yard," she said. "I could keep an eye on it."
Now, she's hoping somebody in a position of authority is keeping an eye on her utility stocks. She's less worried about the money she's invested in Exxon and Quaker Oats.
But Burton is staying informed by attending meetings, and she has faith in the shareholders' lobbyist, Joyce Newman.
"I refuse to worry about anything at my age," Burton said.
Besides, she feels confident that growth in the Las Vegas Valley will keep Nevada Power in business, no matter how many competitors move in.
Given that, she might just might move her utility stocks to the back burner and let them simmer for a while.
"I'm making a gamble any way I go," she said. "I'd just as soon stay with the gamble I know."
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