Merger not likley to effect utility bill | TahoeDailyTribune.com
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Merger not likley to effect utility bill

Sally J. Taylor

If the merger of Sierra Pacific Resources, which includes Sierra Pacific Power Company, and Nevada Power Company is finalized in the spring of 1999 as expected, Lake Tahoe residents will be hooked up with the fastest growing utility in the country.

Not much else will change.

The combined organization, with Sierra Pacific Resources serving as the holding company for both utilities, will serve a total of more than 800,000 electric, 100,000 gas and 65,000 water customers. Based on 1997 figures, the total annual revenues for the combined company would be about $1.5 billion.

The merger creates a company with annual customer and kilowatt hour sales growth of 5 percent and 7 percent, respectively, the highest in the industry.

“In a restructured industry, bigger is better,” said Malyn K. Malquist, chairman, president and chief executive officer of Sierra Pacific Resources, the holding company for Sierra Pacific Power Company. “Because of the savings and efficiencies that will result from the merger, we’ll be able to offer the new services and stable prices that customers will demand.”

Sierra Pacific’s California customers who are waiting to see electric competition arrive at the lake, will still have to wait until Nevada joins deregulation, scheduled to begin on Dec. 31, 1999.

Although electric competition arrived in California in March, California customers of Sierra Pacific Power Company have been out of the loop.

As a Nevada company with limited access to the California power pool where competitive energy sources flow into the network, Sierra Pacific is exempt from most aspects of California’s new competitive electric market.

“Sierra Pacific and other small companies are treated differently” than California’s “big three,” said Sierra Pacific spokesman Karl Walquist.

The merger may not start deregulation any faster, but Sierra Pacific and Nevada power companies do expect the agreement to get Nevada electric competition off to a running start.

Among the proposals in the merger agreement is for each company to sell its electric generation plants. According to the proposal, divestiture, along with new investments in additional high-voltage transmission capacity, will help create competition in the retail energy market.

“With divestiture of the merged company’s generating facilities and by expanding our electric transmission system, we’ll be jump starting Nevada’s entry into the competitive energy markets,” Malquist said at the time the proposal was filed. “The benefit to consumers is that they will have more energy choice.”

Little initial customer impact is expected.

An agreement to share earnings over 12 percent, already in effect for Sierra Pacific, should result in a rebate in 1998 based on the company’s financial performance in 1997. The combined companies are also proposing a long-term freeze in prices for regulated utility service.

Nevada Power and Sierra Pacific will also retain their identities in their respective areas, Walquist said.

“If they live in Las Vegas, they will still be served by Nevada Power and if they live in Reno/Sparks, they will still be served by Sierra Pacific.”

Tahoe Daily Tribune E-mail: tribune@tahoe.com

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