State reduces Nevada utility request to recoup Enron payments
November 28, 2007
A Sierra Pacific Power Co. request for $22.6 million from electricity customers, to help cover a settlement with Enron over disputed power contracts, was cut to $3.1 million and approved Wednesday by the Nevada Public Utilities Commission.
The order, written by Commissioner Rebecca Wagner, provides that Sierra can get $2.8 million of the money from its northern Nevada customers and $340,466 from Barrick gold mines that get power from the Reno-based utility.
PUC Chairwoman Jo Ann Kelly said the order was fair and “closes the book” on a tough period for Sierra Pacific, its shareholders and its 360,000 customers in northern Nevada and the Lake Tahoe area of California.
Sierra’s $22.6 million request represented settlement costs plus legal fees to be collected over four years as part of an overall $90 million settlement by Sierra and its Las Vegas-based sister utility, Nevada Power Co., to end a dispute with now-bankrupt Enron dating to 2002.
While the PUC’s staff backed Sierra’s proposal, the state’s consumer advocate for utility customers challenged the plan on grounds it stems from imprudent power-purchasing by Sierra during the Western energy crisis of 2000 and 2001.
Sierra Pacific representatives argued that the utility’s customers should cover the cost, noting that Sierra and Nevada Power were able to settle for less than a third of the $330 million that Enron sought in court. The decision ended the dispute and the prospect of an uncertain outcome had the court battle continued.
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Several wholesale power suppliers, including Enron, terminated contracts with the Nevada utilities during the energy crisis, saying that they were not satisfied with financial assurances.
Enron, which was already in bankruptcy court, had said the $330 million was the difference between the price it could get selling power on the wholesale market and the price quoted in the contracts with the Nevada utilities.
The $22.6 million sought by Sierra Pacific was separate from the $665 million that Nevada Power was authorized, by PUC and state Supreme Court decisions, to collect from its customers following the energy crisis, which led to rolling blackouts and allegations of market manipulation by Enron and others.
In other action, the PUC approved a slight rate decrease for Sierra Pacific’s 145,000 natural gas customers. The $2.2 million reduction will cut natural gas bills by about 1 percent, which translates into a decrease of just under $1 on bills of typical residential customers.
The commission also approved a rate consolidation for 410 LPG customers that will result in a 32 percent drop in their monthly bills.
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