Nevada Power Company officials cited disappointment today at the Public Utilities Commission of Nevada's (PUCN) decision to cut its general rate increase request. Nevada Power had originally filed the request on October 1, 2001, separate from its pending request for recovery of deferred energy expenses incurred during the peak months of 2001.

The company had initially requested a $42 million increase, but later revised that to $23 million to account for customer growth and other adjustments. The PUCN today ordered a $43 million rate decrease for the utility company, focusing mostly on rate of return, depreciation and other financial and accounting issues.

The reductions ordered by the PUCN today focused on lowering the company's requested Return on Equity, which amounted to approximately $30 million of the disallowance. Other reductions occurred when the PUCN ordered merger costs and savings related to Nevada Power's 1999 merger with Sierra Pacific Resources be deferred to a future rate case. Also deferred was the company's request to recover the costs the company incurred as a result of a Nevada law dictating the sale of its power plants.

"We're disappointed, but what really counts is the sum of this order and our request for the deferred power and fuel expenses," said Nevada Power President Mark Ruelle. "We have not had a request for a rate increase for our regular utility operations since 1993, while we have consistently met the demands of the fastest growing market in the U.S. We are encouraged that the PUCN has held out the opportunity to recover some additional costs at a later date, especially the costs associated with changes in state energy policy.

On March 29, the PUCN is expected to make a decision on Nevada Power's deferred energy case request to recover $307 million annually over a three-year period, which the company spent on behalf of its customers last year when the volatility in the western energy markets drove the cost of electricity to unprecedented high prices.

Ruelle said it would take some time for Nevada Power to review and process all of the details in the commission's decision, but he was pleased that the PUCN accepted a company recommendation to eliminate multi-tiered rates and return to a single energy rate for all residential customers.

"A tiered rate structure can be a hardship on customers in severe climates like Las Vegas," said Ruelle. "Returning to a simpler, single energy rate design will help restore customer confidence in the fairness of rates and offer much more stability and predictability in our revenues."

Headquartered in Nevada, Sierra Pacific Resources (NYSE: SRP) is a holding company whose principal subsidiaries are Nevada Power Company, the electric utility for most of southern Nevada, and Sierra Pacific Power Company, the electric utility for most of northern Nevada and the Lake Tahoe area of California. Sierra Pacific Power Company also distributes natural gas in the Reno-Sparks area of northern Nevada. Other subsidiaries include the Tuscarora Gas Pipeline Company, which owns 50 percent interest in an interstate natural gas transmission partnership and several unregulated energy services companies.

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SOURCE: Nevada Power Company

Contact: Analysts, Rich Atkinson, +1-775-834-5640, or Barbara Doble,
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