The region’s energy crisis dominates this year’s Legislative session. Three urgencies drive the issue:
The regional crisis. There is a severe shortage of power plants in the region. Natural gas is used to fuel the vast majority of our electric power plants – and the cost of natural gas is skyrocketing. Natural gas actually jumped from the lowest price in history a year ago to the highest price in history this year.
The utilities’ crisis. Sierra Pacific Resources, the holding company that owns Nevada Power Company, is facing a genuine financial emergency.
The consumers’ emergency. Nevada home and business owners’ monthly electric utility bills are rocketing upward, and the cycle of increases has only just begun. By the end of 2002, Nevada electric service customers could, in the worst case, be handed a billion dollars in increased electric utility service costs compared to last year.
The governor, legislators and regulators all know time is short. They have a collective responsibility to find solutions; they must find common ground and do so quickly. All three principal groups — the governor, assembly and senate — must concur on every element of an agreement. All three have staked out issues that absolutely must be addressed before they can agree.
The governor has held a series of hour-long press conferences that look more like military war briefings than the usual thematic press announcements common in Carson City. He and his staff have pressed for an agenda that covers every aspect of the problem at hand. Primary among these efforts is his attempt to return Nevada’s electric utility industry to the monopoly it once was. “I’m firmly convinced,” he told a February 23 press conference. “I’m putting deregulation on hold permanently, at least in this administration.” On April 6, Governor Guinn held a mega-press event on the Capitol steps, pressing his crusade to get new power plants built in the state. “We don’t want to be like other states, like California, who can’t control their own destiny.”
Democratic leaders in the assembly and senate have generally agreed with the governor’s above-listed initiatives. Endorsing Assembly Bill 369, which would halt both deregulation and the sale of Sierra Pacific Resource’s power plants, Assembly Speaker Richard Perkins said, “We are going back to a regulated environment because the deregulation experiment has not worked.” Perkins also said AB 369 would save ratepayers between $1.6 billion and $3.2 billion over the next five years.
However, legislators are finding that putting the deregulation genie back in the bottle results in serious complications. The Senate Commerce and Labor Committee’s bill, SB 253, is an effort to cope with those complexities. “The goal of [SB 253] is not only to stop the divestiture of power plants, but to make sure it’s constitutional,” Committee Chairman Randolph Townsend told his committee. “And that’s not as easy as it sounds.”
The sale of the Mojave Power Plant is a good case study. AES Corporation purchased the Mojave plant from its many owners, including Sierra Pacific. Sierra Pacific has already signed off on AES’s purchase; the Nevada Public Utilities Commission (PUC) also agreed, though it later issued a moratorium delaying the sale. AES told the Senate Commerce Committee that it has all the Nevada approvals it needs, and despite what the Legislature and governor may do, the deal is done — period. AES made it abundantly clear it will take the entire case to court if need be.
Many key players, including Guinn, Townsend, Senate Minority Leader Dina Titus, Perkins and Assembly Majority Leader Barbara Buckley, are working hard to build a comprehensive, workable program including positions representing all their most critical concerns. For her part, Buckley often shares concerns that the final legislation must be fair to those who most need protection. “We don’t want to hurt the [utility] company’s considerably precarious financial position,” Buckley told the Las Vegas Review-Journal, “but we also don’t want rate increases imposed without scrutiny.” Buckley has built into assembly bills very clear limitations and strict instructions for how the state’s PUC must operate. She is motivated by concerns over the “global settlement” and the 30-day approval of a $300 million rate increase. “There’s a cloud of suspicion and illegality over these rate increases,” she told the Las Vegas Sun.
The outcome of these discussions is uncertain. The deadline, however, is not —lawmakers have until June 4, and no longer, to reach a final agreement.