Summer power bills may top 300 dollars

NEVADA - The cost of staying cool and keeping the lights on next summer will exceed $300 a month for the typical residential customer if state regulators approve an 8 percent rate increase requested by Nevada Power Co.

The average summer bill will rise $25.25 to $315.63 per month next summer if the Public Utilities Commission approves the Nevada Power rate increase as filed.

On a year-round basis, however, the typical residential customer uses less power on average and will pay $218.75 per month, or an extra $17.50.

Nevada Power executives, however, emphasize that those numbers may not reflect what consumers will be paying starting June 1, because the utility is required to file another rate adjustment for an undetermined amount in January.

The January energy rate adjustment is designed to reflect past and ongoing costs of fuel for generation, in particular natural gas, and wholesale power.

"It's not out of the realm of possibilities" that the utility would seek to lower rates in the January filing, said Walt Higgins, chairman and chief executive officer of parent company Sierra Pacific Resources.

Higgins said did not know whether Nevada Power would ask the utilities commission to recover the cost of settling a contract dispute with bankrupt Enron Corp. and winning an appeal on an earlier rate case.

Eric Witkoski, chief of the attorney general's Bureau of Consumer Protection, expects Nevada Power to ask regulators to boost rates to cover those expenses in the January rate case.

The Nevada Supreme Court ordered a $180 million rate increase for Nevada, ruling that regulators lowered rates too much in 2002. In addition, Nevada Power agreed to pay Enron Corp. about $75 million to settle a dispute over a power supply contract that Enron terminated.

Wednesday's filing was Nevada Power's first general rate increase request, which is designed to adjust its rates to reflect changes in operational costs and new investments in power plants and lines, since 2004.

The utility asked the Public Utilities Commission to raise its rates by 8 percent, producing $172 million more in annual revenue, slightly more than the 7.5 percent Nevada Power rate increase that Witkoski predicted in November.

Witkoski said his team of analysts is ready to review the seven- volume rate increase application. He will recommend the commission disallow "any cost that we don't believe is reasonable. Hopefully, we'll be able to lower (the rate increase)," Witkoski said.

Higgins said he expects a "full and healthy discussion about what's in (the rate case)." But he said part of the requested rate increase stems mainly from building additional power generation plants and buying existing facilities that the utilities commission "previously determined to be prudent."

"We bought those plants at a very low capital costs," said Michael Yackira, chief financial officer of Sierra Pacific Power.

The new and more efficient gas-fired power plants have reduced the cost of electricity by $120 million this year, Higgins said. Nevada Power has invested $1.3 billion in transmission lines, new power plants and lines to new customers since the last rate case three years ago, Higgins said.

The company is seeking approval to earn a 11.4 percent return on equity, which is a measure of profitabilitiy.