Sierra Pacific asks for Nevada ratepayers to pay Enron debt
October 4, 2007
Sierra Pacific Power, which provides electricity to thousands of customers in the Tahoe and Truckee area, is attempting to increase rates in Nevada to repay $22.5 million in debt to now-bankrupt energy giant Enron.
Officials with the energy company said Thursday they are unsure whether they will seek a similar rate hike in California.
Approximately 80 percent of Sierra Pacific’s 46,000 California customers reside in the Lake Tahoe Basin.
“Sierra Pacific hasn’t decided how to proceed in terms of California,” said Karl Walquist, a spokesman for the company.
If the utility were to ask the state to raise prices to recover debt owed to Enron, it would carry a different price tag than Nevada, said Walquist.
The Nevada case was heard before the Nevada Public Utility Commission in three days of testimony that ended on Wednesday. The commission is expected to take a month or more before deciding whether to approve or deny the company’s request.
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Nevada’s Bureau of Consumer Protection filed to block the utility’s application, arguing Sierra Pacific violated its own power purchasing plan during the western utility crisis of 2001. During that period, electric power prices doubled and tripled in some cases and major cities in the West suffered rolling blackouts as utilities struggled to provide service.
Utility officials argued the purchases were reasonable and prudent at the time and that the $22.5 million is a legitimate cost of business which ratepayers should cover. They also argued the issue of whether those contracts were prudent was resolved in the 2004 rate case involving the Enron settlement and can’t be raised now.
This is the final issue in what was originally a demand for $300 million by Enron for terminated contracts with Sierra Pacific and Nevada Power, both divisions of Sierra Pacific Resources. The primary dispute was settled in a deal that limited Sierra Pacific’s potential liability to some $89 million.
The $22.5 million involves contracts which never activated and where no power was delivered to Nevada consumers.
” David Bunker and Geoff Dornan, Sierra Sun and Sun News Service