LAS VEGAS — Nevada Power Co. said it will ask the state Public Utilities Commission to reconsider its order that rejected almost half of the $922 million rate increase the utility sought to recover the cost of buying power last year.
Nevada Power’s parent company, Sierra Pacific Resources of Reno, also announced it intends to delay transmission line projects in southern and northern Nevada to save $125 million.
State Consumer Advocate Tim Hay called delaying the Centennial transmission line project in the south and Falcon-Gonder transmission project in the north “regulatory blackmail.”
Sonya Headen, Nevada Power spokeswoman, said Thursday that the utility will file its appeal by April 15.
In a statement outlining both moves, Sierra Pacific Resources chairman Walter Higgins said the PUC’s decision “erred in excluding evidence that the company’s power purchase costs were prudently incurred.”
He said granting just $485 million of the $922 million rate increase didn’t “fulfill” a state law passed last year to protect the company “as we took risks to protect our consumers from the meltdown of western energy power markets.”
He referred to the company’s decisions to lock into long-term contracts to buy power while prices were high and neighboring California was experiencing shortages and rolling blackouts.
Paul Heagan, a Sierra Pacific vice president and spokesman for Nevada Power, said that among other cost-cutting measures, the company is looking at whether it can continue to hook up new customers.
“Our first obligation has got to be the customers we have today,” he said.
The utility has not laid off any of its 1,800 full-time employees, but is considering reducing the number of contract workers and interns.
The company also has not said whether it will reduce its quarterly stockholder divided of 20 cents per share or file for bankruptcy protection.
Hay said cutting dividends should take priority to cutting necessary projects.
He said Sierra Pacific was punishing large customers that opposed the state-record $922 million rate increase.
Fred Schmidt, a lawyer representing the utility’s largest customer, the Southern Nevada Water District, told the Las Vegas Review-Journal that the plan to curb transmission projects “shows disrespect for the customers, and unmitigated arrogance.”
However, Joyce Newman, president of the Utility Shareholders Association of Nevada, said the utility might have no choice but to cut back on capital projects.
The PUC will have 40 days to respond to a Sierra Pacific appeal.
Nevada Power and Reno-based Sierra Pacific Power Co., which serves northern Nevada, would have to obtain PUC approval before delaying the transmission line projects.
The 180-mile, 345-kilovolt Falcon-Gonder transmission line is planned to run from the Falcon substation near Carlin to a location north of Ely.
The Centennial project would provide transmission lines to move electricity produced at several planned power projects at the Apex Industrial Park north of Las Vegas to Nevada customers and to other western states.
Hay said independent power plants will need the $300 million Centennial project to ship their electricity to market.
Heagan agreed with Hay that the transmission line project is critical.
“They have to have a way to get their power to market, and there is no way to do it without Centennial,” the power company official said.