Sierra Pacific Power Company
Contact: Karl Walquist/Robert Sagan
Phone: (775)834-3891 / (775)834-4834

For Immediate Release

Sierra Pacific Power Co. plans to compete vigorously for customers within the boundaries of the Truckee-Carson Irrigation District (TCID), whose members voted Tuesday to seek $30 million in revenue bonds to take back the electric system Sierra Pacific has leased since 1968, according to Malyn Malquist, senior vice president and principal operations officer for Sierra Pacific.

Sierra Pacific?s lease with TCID expires July 1, 1998. At that time, TCID is required to compensate Sierra Pacific for improvements made to the distribution system since the lease began, estimated at $21 million. TCID needs to obtain $30 million in revenue bonds to pay for the improvements and other expenses. TCID anticipates contracting with Idaho Power Company to operate the system, and Idaho Power might become a wholesale energy provider for TCID.

"It?s doubtful that TCID can easily obtain $30 million in revenue bonds due to the uncertainties of electric competition," Malquist explained."Plus, we expect they?ll have trouble earning enough revenues to pay off the bonds without increasing electric rates for their customers."

The TCID district is comprised of rural Churchill County and portions of Lyon, Storey and Washoe counties, including the communities of Fernley, Wadsworth and Nixon. (The City of Fallon is a wholesale customer of Sierra Pacific and operates its own municipal electric distribution facilities.) Over 11,000 electric customers are located within TCID boundaries.

"We are disappointed by the vote, but not surprised by the outcome since most of the votes were held by a small number of large landowners," said Malquist."We?ve been contacted by many customers within TCID?s boundaries who want to continue getting the same reliable service they?ve gotten from Sierra Pacific since 1968. We plan to act aggressively to ensure they have that opportunity."

Added Malquist,"I?d especially like to thank our 23 Fallon employees for staying focused on their jobs amid the distractions of the bond issue election campaign. As the Fallon newspaper stated in an editorial, our employees are ?the standard of professionalism.?"

Fallon employees have been assured of jobs elsewhere in Sierra Pacific?s service area if they are displaced by employees hired by TCID/Idaho Power. Regulatory Agencies to Settle Key Issues

Legal questions surrounding the reacquisition of the electric system by TCID will be resolved by the Nevada Public Utilities Commission (PUC) and the Federal Energy Regulatory Commission (FERC).

Sierra Pacific has asked the PUC to extend for an indefinite term the provisions of Sierra Pacific?s existing certificate of public convenience and necessity which permits the company to serve retail electric customers located within the boundaries of TCID.

"One of the reasons we filed with the PUC is because of the injustice of allowing TCID?s membership to vote on a bond issuance that will benefit only irrigation district landowners at the expense of retail electric customers who were not given the opportunity to vote," Malquist said.

Only about 3,000 to 4,000 of the 11,000 electric customers within TCID boundaries were eligible to vote. Of those, a much smaller number controlled the election results because the number of votes afforded a qualified voter was based on the quantity of acreage owned and accompanying water rights.

A recent ruling by the FERC in a case involving the Truckee-Donner Public Utility District may greatly restrict TCID?s ability to import electricity from Idaho, Malquist said, adding that the import limitations cast doubt upon TCID?s ability to supply reliable, competitively priced electricity.

"I believe TCID bit off more than they can chew," Malquist said."These are complex, risky issues that are largely unresolved. Should the TCID Board of Directors reach a similar conclusion, Sierra Pacific stands ready to discuss attractive options with the board."