Nevada's Public Utilities Commission on Monday will start deliberating a proposed Sierra Pacific Power Co. rate hike on the operations cost portion of customers' bills.
After a disappointing denial of almost half of they money requested in its rate case for Nevada Power, Sierra Pacific Resources, also parent company to Sierra Pacific Power, is asking the commission for permission to raise fees $28 million in Northern Nevada, or approximately 4 percent on average over three years.
The company, which has operated on a flat fee for almost a decade, has said the increase is necessary to keep up with inflation and the cost of new customer services.
Tim Hay, Nevada's consumer advocate and head of the attorney general's bureau of consumer advocacy, said the meetings should go on for approximately a week. Hay advises the commission in its deliberations, and said he has reservations about the legitimacy of the request.
Hay, along with power customers in the north and south, has said errant business practices have resulted in the additional costs.
Although Monday's meeting deals with a significant amount of money, the real battle starts May 1, when Sierra Pacific Power will ask the commission to raise rates by $205 million to recoup money spent during the western energy crisis last summer.
If granted, the rate hike would become effective June 1, and would raise rates for the "fuel and purchased power" portions of customers' bills by approximately 10 percent.
The company has said the net effect of both raises would raise typical residential customers' rates by approximately 3.5 percent. The bulk of the rate increase would be felt by rate payers in the classes that include industrial customers.
Power rates in Northern Nevada have not gone up since June of last year.
"That will be similar to the Nevada Power case," where talk of bankruptcy followed the commission's decision to only grant $485 million of $922 million requested, Hay said. "We will asking for most if not all of the $205 million to be denied."
Several financial firms downgraded and suggested sell orders for Sierra Pacific Resources stock after the ruling last week, precipitating an almost 50 percent plunge in the stock price.
Despite consumer skepticism, the power company has said its purchasing practices last summer were prudent, given the extreme financial upheaval of western energy markets.