Sierra Pacific Power Company
Contact: Karl Walquist, 834-3891
Bob Sagan, 834-4834
Phone: please see above

For Immediate Release

Because of spiraling costs for wholesale electricity and natural gas, Sierra Pacific Power Company is asking the California Public Utilities Commission (CPUC) to increase electric rates for the utility's 44,500 California customers. Even with the increase, rates will be about 50 percent lower than they are for Californians served by the state's largest utilities.

"Our wholesale costs have gone through the roof because of the energy crisis in the West," said Mary Simmons, vice president of Rates and Regulation for Sierra Pacific Power, adding that Sierra Pacific's average wholesale fuel and electricity costs increased 46 percent in 2000 compared to the previous year.

Sierra Pacific is seeking an emergency rate increase of 2 cents per kilowatt hour (kWh) in its California service area, effective Aug. 1, 2001, which would increase typical residential electric rates by approximately 24 to 27 percent, depending on usage. The typical residential monthly electric bill for a customer using 650 kWh would increase from about $47.12 to $60.12.

The overall increase in annual revenues will amount to approximately 26 percent or $10.2 million. The Reno-based utility also expects to file a general rate case with the CPUC in January 2002 to recover costs for expenses other than fuel and purchased power. The company will ask the CPUC to reinstate the Energy Cost Adjustment Clause, which would allow Sierra Pacific to file for periodic rate adjustments to reflect its actual costs for wholesale energy supplies. These costs would be passed through to consumers on a dollar-for-dollar basis with no profit to the utility. Rates would be lowered if fuel and wholesale energy costs were to drop.

Electric rates for Sierra Pacific's California customers, most of whom live in the Lake Tahoe area, were reduced by 5.6 percent in 1996 and frozen at that level until 1998 when residential and eligible small commercial customers'rates were reduced by an additional 10 percent.

"Because Sierra Pacific Power has sufficient energy resources, our California customers haven't been subjected to the service disruptions that have affected other parts of the state," explained Jeff Ceccarelli, president of Sierra Pacific."We don't expect any energy shortages this summer because we've already secured supplies of wholesale electricity and fuel."

If state regulators approve the increase, residential and small commercial customers will be paying approximately 9.25 cents per kWh for electricity, based on average monthly usage of 650 kWh. Following the increase, average residential rates for Sierra Pacific's California customers will remain approximately 50 percent lower than average residential rates charged by the state's major utilities, including Pacific Gas&Electric. Rates for Sierra Pacific's residential electric customers in Nevada have increased by approximately 23 percent since November 2000 to 10.5 cents per kWh based on average monthly usage of 650 kWh.

The company buys fuel, primarily natural gas, to run its three northern Nevada power plants and it buys electricity from other suppliers to supplement the power generated at its own facilities. About half of the electricity Sierra Pacific provides to customers annually is produced at company owned power stations in Nevada; the balance is purchased from the wholesale market.

Approximately 80 percent of Sierra Pacific's California customers reside in the Lake Tahoe Basin, including South Lake Tahoe, Tahoe City and Kings Beach. The company's California service area extends from Portola in the north to Markleeville and Topaz Lake and Coleville in the south. Sierra Pacific has 266,000 customers in Nevada.

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