Nevada governor may scuttle utility deal

A deregulation settlement reached by state officials and major electric utilities in July could blow up if Gov. Kenny Guinn doesn't go along.

The agreement, approved by the Public Utilities Commission in July, granted Nevada Power Co. of Las Vegas a $48 million rate increase. The PUC also authorized the utility to make monthly rate adjustments for changes in fuel and wholesale power costs.

The deal also set dates for opening the Nevada electric power markets to competition. But Guinn has said he may delay the start of competition for electric power markets until the Legislature convenes in February.

Tim Hay, state consumer advocate, says he'd be surprised if Guinn delays competition, adding that any change by Guinn in the startup dates ''would probably cause us to reconsider the merits of the deal.''

Hay said casinos that signed the agreement are eager to open the markets to competition. Under the agreement, large casinos, schools, water districts, hospitals, manufacturers and mines would be in the first group of large electric power customers able to buy electricity from competitors on Nov. 1.

Sierra Pacific Resources, which owns Nevada Power and Reno-based Sierra Pacific Power Co., disagreed that changes or delays by Guinn would invalidate the deal.

The agreement ''still stays on track even if competition is delayed,'' said Sonya Headen, a spokeswoman for Sierra.

Scott Scherer, Guinn's chief of staff, said the governor wants to make sure the state is ready for open competition in the electric utilities, and also is concerned about an upward spiral in rates.

''He's certainly concerned about what happened in San Diego,'' Scherer added.

California opened its power markets to competition in 1998. When wholesale power prices skyrocketed during a shortage this summer, San Diego Gas & Electric power rates doubled, and state officials reinstated regulatory controls on rates.

Already members of the Nevada Legislature are talking about a return to old-style regulation. Sen. Joe Neal, D-North Las Vegas, has requested a bill to reverse deregulation.

In 1999, the Legislature fined-tuned electric deregulation law with a bill that was pushed through by Sen. Randolph Townsend, R-Reno, chairman of the Senate Commerce Committee.

The measure imposed a post-deregulation rate freeze and set last March 1 as the date for opening electric power markets to competition in Nevada, but gave the governor authority to delay competition.

Guinn did that, explaining that Nevada wasn't ready at that point for deregulation and electric power competition.

Sierra Pacific Resources and the PUC, trying to resolve various rate cases and deregulation issues, then reached the settlement in July.