Nevada electricity sellers may offer variable rates

When out-of-state utility companies enter the Southern Nevada market in 2000, some may offer electricity with rate structures similar to those currently offered by long-distance telephone companies.

Representatives of Nevada Power Co. and Sierra Pacific Resources, meeting Tuesday with members of the news media on the progress of their merger, said consumers can expect to see electricity offered at variable rates, charges based on an index system or a fixed contract rate for a specified time frame.

Michael Niggli, president and chief operating officer of Nevada Power Co., and Malyn Malquist, chairman, president and chief executive officer of Sierra Pacific Resources, said the $4 billion merger of the two companies remains on schedule.

A formal merger will be spelled out in a filing with the Public Utilities Commission of Nevada during the week of July 6. The PUC has been anticipating the filing since April 30 when the merger was first announced. Members of the commission as well as the state consumer advocate have declined detailed comment on the merger until they have reviewed the formal request.

Niggli also said the merger proposal would be submitted to the Federal Energy Regulatory Commission in early August.

By statute, the PUC must complete its approval process within six months. While there is no such requirement at the federal level, the FERC process can take as long as a year, so the merging partners anticipate final approval won't occur until the summer of 1999.

In addition to those two regulatory approvals, the deal must win the favor of the common stockholders of both companies and, because they are publicly traded, the Securities and Exchange Commission.

In their update on the status of the merger, Niggli and Malquist offered their opinions on how rates would change in the era of restructured electrical utilities.

Niggli explained that Nevada Power customers are used to a flat rate system, paying 5.6 cents per kilowatt hour. However, when competition arrives, companies may offer multiple rates based on peak usage and off-peak usage. Some may offer different rates by day or night or by weekday or weekend, Niggli said.

In California, where competition has been in place for 2 1/2 months, some companies have offered to sell electricity based on a power usage index. Niggli said Nevada Power has actually purchased some electricity from California sources at no charge, paying only the wire costs necessary for moving the electrons to Nevada.

"Consumers are going to see a lot of new things when competition arrives," Niggli said. "One of our jobs will be to keep competitors from stealing our customers. That's one of the reasons for the merger, to build a stronger company to meet the competition."

archive