Governor delays opening of Nevada power market

In a setback for deregulation, Nevada's Gov. Kenny Guinn Wednesday pushed back the start of competition in the state's electric power markets by almost 1 year, claiming Nevada does not have a long-term strategy in place for meeting the state's energy needs. Under a July agreement, competition was scheduled to start Nov. 1 for some of the state's biggest power customers, including Las Vegas casinos. But the governor now says competition will begin by Sept. 1, 2001.


Kate Thomas
OGJ Online

In a setback for deregulation, Nevada's Gov. Kenny Guinn Wednesday pushed back the start of competition in the state's electric power markets by almost 1 year, claiming Nevada does not have a long-term strategy in place for meeting the state's energy needs.

Senior executives for Sierra Pacific Resources, the holding company for Nevada Power Co. and Sierra Pacific Power Co., the state's largest utilities endorsed Guinn's decision. But Dave Potter, a spokesman for AES Corp.'s NewEnergy, one of the companies registered as a competitive supplier in Nevada, said the length of the delay is a surprise and his company will have to "regroup and reevaluate" what to do at this point.

Potter also said Nevada, especially the Mountain West Independent System Administration, which will serve as the grid operator, has had "a devil of a time" getting systems in place to operate in a deregulated market.

Under a July agreement, competition was scheduled to start Nov. 1 for some of the state's biggest power customers, including Las Vegas casinos. But the governor now says competition will begin by Sept. 1, 2001. Jack Finn, the governor's spokesman, said Guinn acted under authority granted the governor when he signed the energy restructuring law in 1999.

"It is up to me to decide whether Nevada is ready for deregulation," Guinn said. "And it is my judgment that at this time we are not."

Meanwhile, Guinn said he will appoint a bipartisan energy policy committee to study the state's long-term energy policy and report back by Jan. 15.

"It is crucial that residential ratepayers, Nevada's families, be protected from the sort of rate shock and ureliable supply that we have seen in other parts of the country, most recently and notably, San Diego," Guinn said.

Additionally, Guinn ordered the Nevada Public Utilities Commission to create a fast track review of all pass-through fuel cost filings by state utilities.

"These filings will be reviewed and ruled upon within 10 days," he said, and the results announced publicly by the PUC.

Sierra Pacific Chairman Walter M. Higgins said Sierra Pacific continues to support competition in the electric industry and believes that "real competition, when there are adequate supplies available, is good for the customer.'' Higgins also expressed appreciation for the governor's support of a settlement signed in July that caps the amount that Nevada Power and Sierra Pacific Power can seek in monthly increases for purchases of wholesale fuel and power.

Sierra Pacific has buffeted by changes in the market just as the state was deregulating. To get the merger of Nevada Power and Sierra Pacific Power approved, Nevada State regulators required the two companies to sell off their generation. They did.

This summer the utilities did not have enough power under contract to supply customers' needs during the intense heat that blanketed the Southwest. Buying power on the open market to make up the shortfall cost the company dearly.

Sierra Pacific announced second quarter earnings as well as earnings for the rest of the year would be negatively impacted by unexpected fuel and purchased power expenses. The company said these expenses would exceed budgeted amounts by $70-$80 million for the second quarter alone. Sierra Pacific also reported a second quarter loss of $20.2 million, or 26�/share, on $490.7 million of revenue.

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