Public Utilities Commission members, the state's consumer advocate and state regulators were accused Monday of making a "backroom deal" to raise consumer electric rates in violation of state law.
Assemblywoman Barbara Buckley, and Senate Minority Leader Dina Titus, both D-Las Vegas, said all three clearly promised lawmakers that residential and small business electric rates would be frozen for three years in case the market became unstable during electric deregulation.
Buckley and Titus helped convince the Legislative Commission to defer action on a proposed Public Utilities Commission regulation that would allow electric rates to rise almost monthly.
The settlement was worked out by the PUC and utility officials, who say it is legal. It permits monthly increases in electric rates to compensate utilities for increases in what they pay for power. Rates in the Las Vegas area have already gone up about 9 percent as a result and Sierra Pacific Power Co. is applying for permission to raise charges as well.
The two lawmakers said the Legislature was promised consumers would be protected by a bill approved in 1999 because, for nearly four years, their rates would be frozen to protect them from huge increases in rates which have hit southern California and other places in the wake of deregulation.
"Those small customers are clearly protected by this legislation in clear terms and definite terms," she quoted former advocate Fred Schmidt as telling lawmakers during hearings. And she said utility officials and the PUC echoed those statements.
"Because of that, we voted for deregulation," said Buckley.
PUC lawyer Jeff Parker and PUC Commissioner Don Soderberg both told the commission existing law allows utilities to increase rates to pass along what they pay for power increases. They said to deny them that right would be an "unconstitutional taking."
But Buckley said they agreed to do just that and supported the law.
"We approved a rate freeze that is not being followed because of a global settlement," she said "I don't know how you get to ignore the law just by agreeing to do it."
"Besides, if a statute is in fact unconstitutional, you all can't go in a back room and decide that," she said. "That's for a judge and a court of law."
Titus said utility officials had agreed to a comprimise so they could seek compensation for huge past costs, while small-business owners and homeowners got a rate freeze.
"You've ignored your half of the compromise and left the other in place," she said.
Parker, as well as utility representatives Doug Ponn of Sierra Pacific Power and Bill Peterson of Nevada Power, said the utilities gave up the right to compensation for "stranded costs" - the huge investments they have in generating plants and other assets - as part of the settlement.
And Parker said they were able to make the deal allowing rate increases because the governor has not opened the markets and deregulated the utilities.
"There is no rate freeze until the governor has done that," he said, pointing out that deregulation and the freeze are both in the same legislation.
But Buckley said there is no rate freeze even then because power companies can still file for higher costs every 30 days.
Gov. Kenny Guinn is to decide this week whether to open deregulation or take the issue back to the 2001 Legislature.