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Sierra Pacific asks for 17 percent hikd in electric rates

by Jeff Munson

Sierra Pacific has filed a request with the Public Utilities Commission of Nevada to hike electric rates approximately 17 percent over the next year, beginning March 1.

The proposed electric rate increase is a safeguard against energy problems plaguing California, said Walt Higgins, Sierra Pacific and Nevada Power chief executive officer.

“Nevada, despite a good energy policy, is not immune from what is happening in California,” Higgins said. “This situation is unprecedented, unanticipated and potentially disastrous for Nevadans if we do not exercise the leadership it takes now to correct these imbalances in supply and demand and between cost and price.”

If approved, Sierra Pacific customers will see a monthly power bill increase of $6.37 for households using 650 kilowatt hours or more of electricity per month. Sierra Pacific customers who use 300 kilowatts or less of electricity per month would not see an increase in their power bills due to a tiered rate structure.

Higgins outlined an emergency package of proposed long-term contracts, tiered price increases, low-income assistance and conservation programs to stabilize the energy market in the state.

“We know any rate increase is painful, but there is no escaping the fact that the consequences of inaction are much more severe to the residents and businesses of this state, as California clearly shows,” Higgins said. “Nevadans simply cannot let the lights go out with the kind of irresponsible inaction we’ve witnessed over the hill.”

The plan outlines the state’s short and long-term energy needs, focusing on new mechanisms to recover the rising price of wholesale power. It also calls for approval of long-term power contracts, encourages new power plant development and agrees with the state’s go-slow plan of electricity deregulation.

“The Nevada Legislature and commission have shown a lot of foresight in how to handle energy deregulation in the state, and there is no reason to go backward,” Higgins said. “What we need is to continue forward but in a way that clearly anticipates the impact of market forces in the state.”

The proposal represents an overall increase in rates of approximately 17 percent and up to 29 percent for industries that are high-energy users.

Higgins said that even with the July 2000 Global Settlement, which requires Nevada Power and Sierra Pacific to file monthly rate adjustments for fuel and purchased power, the utilities have lost more than $125 million on fuel and purchased power transactions.

“We are losing millions and millions of dollars now and it will get much worse if this plan is not adopted,” Higgins said.

The utility stands to lose millions more because the caps on price increases are keeping rates artificially low, Higgins said.

“We’ve saved over $30 million in operating efficiencies since the Sierra Pacific/Nevada Power merger, but we simply do not have the same ability to control $1.5 billion annually of fuel and purchased power expenses in an energy market that’s gone haywire.”