News Releases

Nevada Utilities File Federal Suit Seeking Roll-back of Wholesale Power Prices

Dec 4, 2001

Sierra Pacific Resources
Analyst Contacts: Rich Atkinson, 775-834-5640
Barbara Doble, 702-367-5647
Media Contact: Karl Walquist , 775-834-3891
Phone: See Above

For Immediate Release

Las Vegas, Nev.Â- Nevada Power Company and Sierra Pacific Power have filed formal complaints with the Federal Energy Regulatory Commission (FERC) seeking a reduction in future prices on contracts they entered into to serve their customers during the height of the energy crisis. The filing with the federal agency marks the most recent challenge by the companies to federal policies that effectively favored California at the expense of other western states.

If successful, the complaint could reduce the price for many near-term power contracts by essentially capping prices for power to be delivered in 2002 and 2003.

The Companies charge that the prices for long-term wholesale power were"the product of markets found by the Commission to be dysfunctional and not competitive" and should come under the same price caps the FERC imposed on spot power sales in the West last June. Nevada Power and Sierra Pacific Power had secured near and intermediate-term power contracts in late 2000 and early 2001 as the energy crisis worsened to protect their customers from unreliable supplies and rapidly escalating short-term prices. The FERC, however, unexpectedly imposed price caps in June but only applied them to spot power markets, the more volatile markets when California was most active.

"The FERC decision several months ago set off a string of events that unintentionally flipped the normal market model on its head by penalizing states that had secured longer- term contracts at a time when spot power prices were out of control," said Walt Higgins, chairman, president and chief executive officer of Sierra Pacific Resources (NYSE: SRP), parent of the two utilities."If FERC's intent in the price caps was to set what it considered to be a fair and reasonable level for power, it certainly should apply to all power sold in all markets during the period. This is especially true for states like Nevada, which had taken the prudent steps to secure contracts that generally are more reliable and lower cost than spot power."

In their filing, made under Section 206 of the Federal Power Act, the companies are asking the FERC to reduce the prices of the contracts to the current market prices.

Named in the Nevada Power filings are BP Energy Company, Merrill Lynch Capital Services Inc., Mirant Americas Energy Marketing LP, Morgan Stanley Capital Group Inc. and Reliant Energy Services Inc. Named in the combined filings for Sierra Pacific Power and Nevada Power are American Electric Power, Calpine Energy Services LP, Duke Energy Trading and Marketing LLC, El Paso Merchant Energy LP and Enron Power Marketing Inc.

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