Sierra Pacific expected to request higher rate

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Sierra Pacific Power Co. is seeking another rate increase to offset costs the company says it incurred during energy price spikes last summer.

The company is expected to file for a fuel and purchased power rate increase of at least $177 million today with Nevada's Public Utilities Commission.

If approved, Northern Nevada and some Lake Tahoe customers would be looking at an increase of approximately 20 percent in the cost of electricity by summer, the biggest in a 15-month string of rate increases.

Sierra Pacific spokesman Karl Walquist said Thursday the exact amount of the increase has not yet been released, but Nevada Consumer Advocate Tim Hay expects it to be the largest single increase in the company's history.

"Right now we have been focusing almost all of our resources on Nevada Power (Sierra Pacific Power's sister company, which serves Las Vegas), but we anticipate recommending something substantially lower," he said.

At question will be the legitimacy of the rate increase request, and whether long-term contracts the company entered into during the Western energy crisis were prudently calculated. The Attorney General's Bureau of Consumer Advocacy counsels the board in its decision.

"We look at how it was acquired, at what price it was acquired and whether the company acquired more than it needed," Hay said.

Today's request comes just two months after Sierra Pacific Power sought $28 million in operating revenue -- a 4 percent increase -- through general rate increases on customers' bills. Both proposals are expected to go before the commission in the first of a series of public meetings on April 8.

The company is asking the commission to approve both rate increases and make them effective June 1.

Similar requests have resulted in much controversy in Southern Nevada, where in December Nevada Power Co. asked the commission to approve $921 million in additional charges to its customers.

Last week, a public meeting in Las Vegas was so crowded with disgruntled consumers -- 400 showed for a 275-seat auditorium -- the company scheduled an additional meeting.

Nevada Power's proposed plan would raise power rates by as much as 16 percent in Southern Nevada. Consumers, along with Hay, questioned the company's business practices at the meeting.

According to Associated Press reports, documentation shows Nevada Power bought 77 percent more power on the wholesale market in late summer (2000) than it did a year earlier. And critics of the proposed increase note that Sierra Pacific Resources, the parent company of Nevada Power, reported that it cut its own generating capacity by 20 percent. The same report shows wholesale power cost almost four times as much as power from Nevada Power's own plants.

"You've got two issues: Why did they buy that much (power) and whether these purchases were necessary, which goes to the prudency argument," Hay told the Associated Press. "They are going to fail on both tests."

In defense of its position, Nevada Power has argued that it chose to buy spot-market power instead of generating in-house only when it was the less expensive option.


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