Nevada utilities ask FERC to lower prices on power contracts

Nevada Power Co. and Sierra Pacific Power Co. petitioned the Federal Energy Regulatory Commission to reduce prices for wholesale electricity under contracts signed last year to current market prices. The complaint filed Wednesday at FERC said long-term wholesale power prices should have come under the same price caps FERC imposed on spot power sales in western power markets last June.

By the OGJ Online Staff

HOUSTON, Dec. 6 -- Nevada Power Co. and Sierra Pacific Power Co. petitioned the Federal Energy Regulatory Commission to reduce prices for wholesale electricity under contracts signed last year to current market prices.

The utility units of Sierra Pacific Resources alleged the contracts were signed at a time FERC deemed the markets and resulting prices in the West to be "dysfunctional." The prices should be changed, the companies said.

The complaint filed Wednesday at FERC said long-term wholesale power prices should have come under the same price caps FERC imposed on spot power sales in western power markets last June. Nevada Power and Sierra Pacific signed near and intermediate term contracts for power in late 2000 and early 2001 as the energy crisis worsened.

The companies agreed to the contracts to protect their customers from unreliable and dwindling supplies of power and rapidly escalating short-term prices, they said. FERC imposed price caps on power in June after months of disagreement with California state officials over the causes of that state's power supply and price problems. The caps applied only to spot power because those markets were the most volatile in California.

"The FERC decision several months ago set off a string of events that unintentionally flipped the normal market model on its head by penalizing states that had secured longer-term contracts at a time when spot power prices were out of control," said Walt Higgins, CEO of Sierra Pacific Resources, Reno, Nev.

Higgins said that if the intention of FERC was to insure that prices are fair and reasonable, then the caps should apply to all power sold in all markets during the period FERC specified for the caps.

Nevada Power specifically asked for changes in terms to be applied to contracts with BP Energy Co., Merrill Lynch Capital Services Inc., Mirant Americas Energy Marketing LP, Morgan Stanley Capital Group Inc., and Reliant Energy Services Inc.

In addition to the above companies, Sierra Pacific Power also asked for similar changes to contracts with American Electric Power Co. Inc., Calpine Energy Services LP, Duke Energy Trading and Marketing LLC, El Paso Merchant Energy LP, and Enron Power Marketing Inc.

More in Home