News Releases

Nevada Power Files Deferred Energy Case

Nov 29, 2001

Nevada Power
Contact: Sonya Headen
Phone: (702) 367-5222

For Immediate Release

Nevada Power Files Deferred Energy Case
Based on Accumulated Natural Gas and Purchased Power Cost

Las Vegas, November 30, 2001/ --- Nevada Power Company (SRP) filed a request with the Public Utilities Commission of Nevada (PUCN) today to recover the actual costs for wholesale power and fuel it purchased for customers during the height of the energy crisis. The request, prescribed under a law passed earlier this year designed to delay further rate increases during the crisis, seeks to increase rates approximately $307 million (21 percent). These rates are expected to remain in place for three years.

"This amount is somewhat less than we thought it might be even a few weeks ago, but it is still a difficult increase for our customers," said Mark Ruelle, president of Nevada Power."It has been frustrating for all of us to endure the costs of the California energy disaster, but Nevada's approach of spreading these costs out over time has helped keep the lights on in our state during a period of unprecedented turmoil in this industry."

The costs for wholesale power and fuel purchased by utilities to meet peak demands soared to record levels earlier this year in most western states, far outpacing the amount covered in customer rates. Nevada Power lost more than $300 million, early a fourth of the total wholesale power balance, before the Nevada Legislature stepped in. Under the Nevada law passed during the worst of the crisis, electric rates in the state were temporarily frozen and Nevada Power was assured it could recover its actual and prudent costs the following year.

"This law served as an important signal to others outside Nevada that it was safe to loan us money or invest in our operations to keep the lights on, knowing that we pay our bills," Ruelle said."It has been a painful price to pay, but reliability is critical to our way of life in Nevada and this approach has shown there is a way through all the uncertainty that other states are currently facing."

Ruelle added that Nevada is not the only state faced with addressing the impacts of the energy crisis. Oregon, Washington, Idaho, Montana and Utah are experiencing similar issues and California is redirecting billions of dollars away from other important public services, creating a shortfall in the state's general fund."Fortunately, Nevada is not facing that type of situation," he said."We will continue to explore every opportunity to find relief for our customers, including discussing options with our suppliers, seeking changes in federal policies that favor California and taking advantage of lower energy costs going forward."

Following a thorough review and pending approval by the PUCN, rate changes are expected to take effect in April 2002. This request is for recovering wholesale fuel and electricity purchases and what it cost the company to carry the balance. All wholesale costs are passed on to the customer, dollar-for-dollar after an extensive review conducted by the PUCN staff and the Bureau of Consumer Protection.

Until June, Nevada Power expected the proceeds from sales of surplus energy would reduce the deferred balances. Changing market conditions compounded by federally imposed price limits, drastically reduced prices for future energy sales, significantly reducing the company's ability to offset its deferred costs.

Headquartered in Nevada, Sierra Pacific Resources 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 a 50 percent interest in an interstate natural gas transmission partnership, several unregulated energy services companies and Sierra Pacific Communications, a telecommunications network development company.