Sierra Pacific plans more rate hikes

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Sierra Pacific plans more rate hikes Filed: 12/15/2000

RENO, Nev. (AP) — Sierra Pacific Power Co. plans to ask state regulators for another electricity rate hike, the fourth in the past few months.

It won't be the last.

If the company's latest request is approved as expected, the rate paid by typical northern Nevada residential users would increase by 61 cents a month beginning in February.

A 62-cent rate hike took effect two weeks ago. Another increase of similar amount is still pending before the state Public Utilities Commission. That one, if approved, will take effect Jan. 1.

The first increase, amounting to $2.08, began Nov. 1.

At issue is Sierra Pacific's efforts to recoup at least some of its upstream costs for energy needed to serve its 302,000 electricity customers as the state moves toward electricity deregulation.

In a settlement with utilities reached last summer, state regulators agreed to allow utilities to recover costs of providing power through capped, incremental rate hikes.

If the PUC approves them all as expected, the typical customer will pay an additional $3.93 in February over October. And if Sierra Pacific's long-range schedule for capped rate hikes pans out, the typical customer in February 2003 will be paying $24.99 more a month than two months ago.

There is no profit for the utility, Mark Ruelle, Sierra Pacific's chief financial officer, said Thursday. And no end to high energy costs, either.

"There's really nothing that says prices will come down. It's just not going to happen," he said.

The rate filing, he said, "is based on actual costs we've already paid for from November 1999 through October 2000."

By tacking on small rate hikes over 2 1/2 years, officials said, Nevada avoids the rate shock that has hit San Diego-area consumers in California's newly deregulated and crisis-ridden electricity industry.

Sierra Pacific Resources, parent company of Sierra Pacific Power and Nevada Power companies, also averted a California-like crisis because the utility bought hefty energy supplies before this year's price run-up, Ruelle said.

"We're in no imminent crisis," he said. "But long-term, we have to have the ability to pay for energy supplies for our customers. By securing future supplies, we minimized the danger."

Tim Hay, Nevada's consumer advocate, supports the settlement that outlines limited monthly rate hikes in Nevada. He said it is much more palatable for consumers, given the 300 percent or higher increases in California.

Hay said settlement also calls for independent audits of Sierra Pacific's records to ensure the rate hikes are warranted.

"We'll have the ability to go back and retroactively adjust rates" if the audits don't support a rate increase, he said.

So far, consumers have the advantage, Hay said. Caps on how much Sierra Pacific can boost rates will hold the monthly increases to a total of about 7 percent through February. And the utility has been recovering, on average, less than one-half of its increased energy costs.

"If we didn't have the caps, we'd be looking at increases of 40 percent now," Hay said. "Prices may be going through the roof, but the settlement protects consumers from big monthly increases."

http://www.bakersfield.com/oil/Story/258629p-243320c.html

-- Martin Thompson (mthom1927@aol.com), December 15, 2000


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