Consumer Advocate, Nevada Utility Disagree on Power-Buying Plans

John G. Edwards , Las Vegas Review-Journal - 7/13/01

Jul. 12--State Consumer Advocate Tim Hay Wednesday said he is concerned about  Nevada Power Co.'s plan to buy electricity wholesale to satisfy the valley's growing demand for electricity, rather than build its own power plants.

Hay said he is still reviewing the utility's plan for the future, which was  filed late Tuesday, but he already has focused on one key element of the plan.

"We consider one of the big issues the question of whether Nevada Power  should be building more of its own generating capacity," Hay said.

Nevada Power has more control over its own power plants than it does through contracts with independently owned power plants, he said. Already, the utility gets about half of the power it sells retail in the summer from wholesale sources, such as independent power producers.

But Jack Motter, director of strategic business development for Sierra Pacific Resources, Nevada Power's parent company, noted earlier Wednesday that "it's cheaper for us to purchase power" than to build new plants.

Nevada Power also is seeking Public Utility Commission approval of a $500,000  study on the feasibility of building a coal-fired power plant.

The Las Vegas utility is proposing to buy additional electric supplies for the future, so it can meet unanticipated customer demand in Southern Nevada, Steve Oldham, senior vice president of Sierra Pacific Resources, said Wednesday.

Nevada Power, which went through its first controlled blackout July 2, wants to secure more electricity than it anticipates needing so it can meet unanticipated spikes in demand.

If the utility's retail customers do not need the power, Nevada Power could  sell it wholesale, possibly at a profit, Oldham said.

In the July 2 blackout, Nevada Power sold 255 megawatts at $90 a megawatt  hour that morning, because it had committed itself to sell the electricity the  previous Friday, the company told the PUC on Monday.

Then, it was forced to pay $117 a megawatt hour for some of replacement power  the day of the blackouts even though the price appeared to exceed a $91.86 federal price cap.

Nevada Power made the firm commitment to sell the 255 megawatts of power based on information that was available that Friday, including inaccurate  weather forecasts, Charles Hunter, the utility's manager of power trading, told the PUC Monday.

In its resource plan, Nevada Power projects electric demand will peak at 4,640 megawatts this summer, up 8 percent from last year. But it estimates the peak demand for power will grow by 3.9 percent through 2004.

The company intends to contract to buy a total of 250 megawatts of power from  Duke Energy of Charlotte, N.C., and Mirant Corp. of Atlanta. The two companies are building natural-gas fired generating plants at the Apex industrial area north of Las Vegas near the intersection of Interstate 15 and U.S. Highway 93.

The power will not be plant-specific so an outage at the new plants won't  affect Duke and Mirant's responsibility to provide the power, the utility said.  But Oldham said the contracts would satisfy contract requirements with Duke and  Mirant, including their agreement to sell part of their plants' capacity to  Nevada customers.

The Las Vegas Valley Water District entered the contracts and agreed to  provide water for the plants based on a promise that each utility would sell 25  percent of their generation to Nevadans at favorable prices.

"We think the contracts we've entered into are below replacement cost,"  Oldham said. "We think these are good deals."

The independent power companies will build bigger, more efficient plants than  Nevada Power could justify for its own needs, Oldham said.

Oldham acknowledged that power plant developers are concerned about the  Federal Energy Regulatory Commission's decision to cap wholesale power prices in the West. The most worried are developers of so-called power peaking units,  which are designed to meet demand when demand is highest, but he noted the price caps end in September 2002.

"Frankly, it's tough for these guys to get built by then anyway," Oldham said.

DUST DEVIL ACCIDENT CUTS POWER TO HOMES

About 10,000 Nevada Power customers were left without power Wednesday  afternoon after a street sign picked up and dropped by a dust devil sliced through a key power line, the utility reported.

The electric customers lost power for an hour and a half while Nevada Power  crews repaired the damage, said Sonya Headen, a utility spokeswoman.

The affected customers were in the area bounded by Spring Mountain Road, Jones Boulevard, Charleston Boulevard and Interstate 15, she said.

Another 450 were still without power late Wednesday evening because a power  pole caught fire at Sahara Avenue and Lindell Road.

"It is not a rolling blackout," Headen said.