News Releases

Bond Election on Nov 18

Nov 17, 1997

Sierra Pacific Power Company
Contact: Karl Walquist/Robert Sagan
Phone: (775)834-4315

For Immediate Release


Sierra Pacific Power Co. is challenging plans by the Truckee-Carson Irrigation District (TCID) to take over the electric distribution system that serves 9,600 of Sierra Pacific?s electric customers in Churchill County and portions of Lyon, Storey and Washoe counties.

Sierra Pacific has operated and improved the electric system since 1968 under terms of a 30-year lease with the TCID due to expire on June 30, 1998. TCID officials have rejected various offers by Sierra Pacific to renew the lease and instead announced plans to take over the facilities. The irrigation district?s board of directors has announced the district plans to contract with Idaho Power Company to run the system.

"We want to continue to serve our TCID customers as we have for the past 29 years. We can guarantee them reliable service and stable prices for electricity," said Malyn Malquist, senior vice president and principal operations officer for Sierra Pacific."The $30 million in revenue bonds that TCID needs to assume control of the system represents a serious financial risk to the electric customers served by TCID."

The revenue bonds will be used to pay Sierra Pacific for approximately $21 million in improvements that have been made to the electric system since 1968, and to fund start- up costs for the TCID takeover.

Revenues needed to pay off the bonds may drop sharply if large retail electric customers served by TCID, such as the Fallon Naval Air Station or Nevada Cement, choose other electric providers when Nevada?s electric utility business is deregulated in two years. If that occurs, TCID may have to increase electric rates to the remaining customers to make up for lost revenues, Malquist said.

Although TCID officials have stated the distribution system assets are worth as much as $70 million, Malquist said the actual value of the facilities, based on the price/earnings ratio of similar electric distribution systems, a common method of asset valuation, is about $21 to $32 million, or one-third to one-half the amount suggested by TCID officials.

Water rights holders are scheduled to vote on the bond issue on November 18, 1997. Only about 3,000 to 4,000 of the 9,600 electric customers currently served by Sierra Pacific will be eligible to vote in the election. Other TCID members are entitled to a varying number of votes, depending on the number of water rights they hold.

"A small group of water rights holders may decide who will provide electric service to the almost 10,000 customers living in the area," Malquist said."Many of the customers we serve have told us they want to remain with Sierra Pacific. But they don't get to vote.

"We're urging water rights holders to vote ?no? on the bond issue and all electric customers living in Fallon, Fernley and Wadsworth to contact the TCID Board and ask them to consider alternatives to a takeover," Malquist said."The long-term risks of a takeover greatly outweigh any short-term price reductions for electric customers."