Hay challenges Nevada Power right to issue long term debt
July 9, 2002
Consumer Advocate Tim Hay, who wants Nevada Power’s $400 million rate increase blocked, has now challenged the Public Utility Commission’s decision allowing the utility to issue $300 million in secured long-term debt.
He said the utility commission order issued June 19 was based on a deficient application. He said utility commission Chairman Don Soderberg described the Nevada Power application as “probably as sketchy as we’ve ever seen.” Nonetheless, Hay said Soderberg allowed Nevada Power to modify the application during the hearing.
He said that effectively deprived the Bureau of Consumer Protection any fair opportunity to analyze or verify the content of the application.
He requested a complete rehearing of the application pointing out that the data he has conflicts with information provided by the utility during the hearing and casts doubt on the necessity of for the loans. He said the order also fails to identify an appropriate interest rate.
“Without any limitation on interest rates, ratepayers bear all of the risk of paying unreasonable rates in order to provide debt service for the power company,” Hay said. “The company has a legal obligation to demonstrate that the funds are needed and must provide specifics on how the money will be used in order for the commission to make an informed, lawful decision.”
About two weeks ago, Hay filed suit to block Nevada Power from imposing a $400 million rate increase to pay for fuel and purchased power costs deferred over the past year. He said the legislature provided that the utility could pass on prudently incurred costs to ratepayers but said most of the loss was the company’s fault.
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Hay argues ratepayers shouldn’t be forced to pay for the company’s mismanagement.
Nevada Power is the Southern Nevada sister company to Sierra Pacific Power Co. in Reno. Both are owned by Sierra Pacific Resources. Sierra Pacific Power is fighting similar battles trying to recover its deferred energy costs.
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