Regulator hopes to deregulate Nevada power market by fall

CARSON CITY -- If all the pieces fall into place, open competition in the Nevada electric industry, which was initially scheduled to begin March 1, could be started this fall.

The state Public Utilities Commission is nearing completion on two final regulations that would end the monopolies held by Nevada Power Co. in Las Vegas and Sierra Pacific Power Co. in Northern Nevada.

PUC Chairman Don Soderberg said Wednesday the Federal Energy Regulatory Commission must approve the rates the two utilities can charge energy suppliers for using their lines to transport power to the users. The application to the regulatory commission would also set the rules to assure there was no discrimination against a company for using the transmission facilities.

A spokesman for Sierra Pacific Resources Inc., the parent of the two utilities, said the open access tariff would be filed within the next two weeks with the federal agency.

Assuming no glitches, Soderberg said the state regulatory work could be done this summer and the federal agency could approve the rates by fall but he added, "Assuming a court does not enjoin us."

"And at this point there is no injunction on the horizon," the chairman said.

Sierra Pacific Resources filed suit in federal court seeking to overturn the law that called for opening the markets to competition. And Nevada Power has a suit in Carson City, seeking to boost its rates $110.7 million before deregulation kicks in.

Meanwhile Sen. Joe Neal, D-Las Vegas, plans to introduce a bill at the 2001 Legislature to scrap deregulation, saying it will lead to higher rates for consumers under the present conditions.

Right now, Neal said there is a capacity for generating 78 million megawatts of electricity nationwide and 70 million is already committed. That leaves 8 million megawatts in reserve. That power, he said would go on the open market to the highest bidder.

If that happens, he said, "Too many people will suffer." The highest price paid by the supplier means increased cost to the consumer.

The 1999 Legislature imposed a three-year freeze on rates for consumers so that consumers would not be hurt when the markets are opened. But prices could rise after that.

In newspaper advertisements, Sierra Pacific made the same point about tight supplies as Neal did earlier this week. It urged consumers to conserve electricity because there's the possibility of running out of power during peak periods in the summer. Very few new power plants are under construction as the electric industry makes the transition to competition, the utility said.

Population and demands continue to increase, especially in the West. Sierra Pacific said it can generate most of the needed electricity but it still must go on the open market to buy additional power. "Though this is not unusual for us, the temperatures on the West Coast (especially in California and Oregon) have been much hotter than usual this summer -- meaning the strain on other available power supplies is far greater.

"Prices for both petroleum and natural gas have increased dramatically in the past few months. Many plants use these fuels to generate electricity. Hence, higher prices and smaller supplies. And still, there is a steadily growing demand," said Sierra Pacific.

The regulations to be completed by the Public Utilities Commission involve past costs and the provider of last resort. One rule would allow the two utilities to impose a surcharge or rate to compensate them for past investments. The second would decide how to handle customers, who in the new era of open competition, do not choose a power supplier.

Soderberg said those are the "two things outstanding," before the commission.

It will be up to Gov. Kenny Guinn to decide when the market is ready to open.

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