Consumer advocate challenges Nevada Power rate hike bid
CARSON CITY — Nevada Power Co.’s entire $922 million rate hike request should be rejected because the utility had unwarranted expenses exceeding that amount, the state’s consumer advocate said Wednesday.
In documents filed with the state Public Utilities Commission, Tim Hay said prudent purchasing strategies could have reduced the Las Vegas-based utility’s expenses by $940 million.
Hay said an analysis by his office’s technical experts showed that Nevada Power bought far more power from other suppliers than needed to meet its customers’ needs — and bought that power at excessive prices.
“Based on the evidence we are presenting, any objective observer would conclude these practices were clearly imprudent,” said Hay, noting that under state law imprudent costs can’t be passed on to ratepayers.
Hay also said the utility failed to correct its flawed purchasing strategies following a bail-out by ratepayers in mid-2000. “This disregard for Nevada ratepayers must not stand,” he told the PUC.
“There was absolutely no risk-management strategy,” Hay said in a telephone interview. “It was a very risky transaction to procure power at the very worst time you could probably conceive of.”
The consumer advocate also said he’ll oppose any efforts by Nevada Power to keep confidential some of the information that has been disclosed by the utility in advance of the PUC hearings in the big rate case.
The filing by Hay’s office followed claims last week by Walt Higgins, chairman and chief executive officer of the corporate parent of Nevada Power, that Hay and others have been telling lies and half-truths about the rate case.
Walt Higgins, head of Sierra Pacific Resources, complained about “a campaign of misinformation” leading up to the PUC hearings on the case next month.
Higgins said the utility purchased 76.8 percent more power in 2001 than the previous year, but sold excess energy on the spot market and used the revenue to offset the cost of providing electricity to ratepayers.
He said Nevada Power was responding to a power crisis in the West that unfolded as California’s restructured electric utility markets collapsed, wholesale energy prices soared and rolling blackouts hit some California cities.
If the rate hike request is approved, customer rates could increase as much as 25 percent. Hay has said the proposal, when combined with increases already granted the utility since August 2000, would add up to increases of 50 percent or more. And he’s concerned that there are more rate increase proposals planned.