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Las Vegas Review Journal
www.lvrj.com
Guinn signs into law end of deregulation
Thursday, April 19, 2001
A bill ending Nevada's brief flirtation with electrical
utility deregulation was signed into law by Gov. Kenny Guinn
late Wednesday, the same day it sped through final action
in both houses of the Legislature.
The new law also stops Nevada Power Co. and Sierra Pacific
Power Co. from selling their power plants for an estimated
$1.7 billion. Twice a year, the two utilities will be allowed
to collect from their customers increased costs they pay
for natural gas used in their plants and for the electricity
they purchase from other utilities.
But the Public Utilities Commission must review and give
its approval before customers are ordered to pay these deferred
energy costs. And the utilities will not automatically implement
slightly higher rates every month as they have since last
summer.
"It is the very best deal we can do for ratepayers,"
Guinn said. "This does not mean our power rates will
not go up. Anytime you have high demand and low supplies,
rates will go up."
Because the power plants will not be sold, Nevadans will
receive the cheapest possible power because the PUC, rather
than market forces, will determine what the two utilities
can charge, he said.
About 50 percent of the power Nevadans need at peak times
is produced by their plants. They purchase the remainder
on the open market.
"It is good for our customers, our shareholders and
the state," said Doug Ponn, a lobbyist for Sierra Pacific
Resources, about the new law. "It is a step toward
financial viability for the company."
At a news conference, Guinn repeatedly stressed that the
key to keeping Nevada Power and Sierra Pacific solvent is
their ability to collect increased costs from ratepayers
through deferred energy accounting. He said the lack of
a deferred energy law in California is the primary reason
why its utilities have drifted into bankruptcy.
Assembly Majority Leader Barbara Buckley, D-Las Vegas,
said the new law will protect residential customers from
the high rate increases that have plagued residents of California.
"It is foolish for us to divest our power supply when
it is in such great demand," she said. "The Assembly
felt very strongly that in this time of crisis they should
not be allowed to exit our system."
She added that the Assembly will not allow deregulation
to begin until members are assured residential customers
are protected from skyrocketing rates. Hearings will begin
next week to discuss a proper time for a deregulated electrical
utility industry.
Buckley said the new law also blocks Sierra Pacific Resources,
the parent company of Nevada Power and Sierra Pacific Power
Co., from buying Portland General Electric Co. without the
approval of the PUC.
"It is important for our PUC to review and approve
any acquisition of another company when that action could
result in Nevada ratepayers subsidizing rates of people
living in a different state," she said. "We believe
that is what would have happened."
In addition, mining and gaming companies likely will try
to amend another bill, Assembly Bill 661, so they can buy
power outside of PUC controls. Guinn said he supports "partial
deregulation" for these businesses as long as it increases
the amount of low-cost electricity available for other consumers.
The new law repeals a 1999 statue that was designed to
end PUC authority to set rates and rules for electrical
utilities starting in March 2000. In exchange, legislators
stipulated residential rates would not increase for three
years.
But with rising energy prices in California and other states,
Guinn decided to delay deregulation. The law permitted Guinn
to determine whether deregulation should begin.
Under the new law, legislators hope customers will receive
cheaper power by having the PUC continue to set the rates
utilities may charge. With deregulation, prices would have
been determined by the free market.
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