Sierra Pacific customers get surprise rate increase in Nevada Power deal

Sierra Pacific Power Co. customers will get a surprise electric rate increase from Thursday's deal between the Public Utility Commission and Nevada Power Co.

Regulators approved a series of compromises this week to dismiss three lawsuits, including one blocking electric deregulation.

As part of the deal worked out by Nevada Power, the Nevada Resort Association and three casino companies, the freeze on electric rates for residential consumers is lifted Aug. 1, letting the Southern Nevada utility adjust for rises in fuel costs.

Nevada Power customers will see a 4.7 percent increase immediately and could wind up paying as much as 11 percent more by the start of 2001.

But the settlement agreement isn't limited to Nevada Power. Its sister company, Sierra Pacific Power, also was given permission to adjust its rates to compensate for rising fuel costs in Thursday's hearing.

Sierra Pacific customers in the Reno-Sparks and Carson-Douglas areas can expect a 1.8 percent electric hike effective Aug. 1.

Commissioner Judy Sheldrew, the only one of three PUC members to oppose the plan, said both Sierra Pacific and Nevada Power will be allowed to adjust their rates every month under the plan.

She said Sierra Pacific customers are the "innocent bystanders" in the deal, which was originally filed as just a Nevada Power rate case. In a worst case scenario, testimony indicated they could see increases up to 8.7 percent by next April.

She said payers statewide were giving up too much in the compromise and questioned whether the agreement violated the deregulation law approved by the 1999 Legislature which froze utility rates for three years.

"My concern was that the utilities went to the Legislature to get this bill and this was part of the commitment made to the Legislature," she said. "Now, they want us to sort of wink at the law and go ahead and unfreeze the rates."

Utility officials said during the hearing that fuel prices could fall instead of rise, lowering rates for customers. But they admitted that's not likely for at least the next few months since fuel prices have been rising around the West.

They also pointed out the deal would increase commercial and industrial rates by more than it increases residential electric rates.

Sheldrew said that doesn't matter since the deregulation plan allows them to bail out of the regulated market and cut their own deals with utilities as early as Nov. 1. Residential customers, however, would still be locked in to their existing utilities - and whatever rates they charge - until sometime between September and December 2001.

Consumer Advocate Tim Hay disagreed with her, saying it was a good deal because it would protect Nevada customers from the extreme rate increases seen in parts of California this year.

The agreements must still be approved by the judges hearing the three separate lawsuits challenging Nevada's deregulation plan. And the commission meets again Aug. 3 to consider related cases affected by the plan.