Sierra Pacific rate case under review

Sierra Pacific Power made its case Monday for a rate hike for Northern Nevada customers amid questions about electricity market buying practices and accounting methods.

The company appeared before Nevada's Public Utilities Commission to ask permission to raise rates approximately 10 percent to recover $205 million spent last summer for power on the open market.

Testimony in the hearing is expected to last into next week with a decision in the case expected by early summer. According to the company, the request would result in a 9.9 percent increase for all customers, and a 7.7 percent increase -- or an average $5.92 a month -- for typical residential customers.

"We're here to put our best case forward," Sierra Pacific spokeswoman Faye Andersen said. "We just have to have faith in the process and hope for the best."

Accountants and energy traders for the utility were questioned Monday by representatives from the commission, Nevada industry and the state Attorney General's Office about buying practices when the most expensive energy contracts were entered into last summer.

Also at issue was the accounting methods the company employed to arrive at the $205 million figure.

Similar to the Southern Nevada rate case where Nevada Power, a subsidiary of Sierra Pacific Resources, asked to recoup nearly $1 billion, opponents of the increases have charged the company with buying too much power at inopportune times.

In that case, concluded in May, the commission granted only half of the requested amount, which sparked rumors about the company's solvency and resulted in downgrades to the company's bond ratings.

Sierra Pacific has said it acted prudently throughout Nevada buying costly power when energy markets hit a high last summer in the wake of a western energy crisis.

As part of the rate case currently before the commission, Sierra Pacific Power had also requested to increase operating costs portions of customers' bills by a total $28 million over three years, but that request was reduced to $16 million. The commission concluded deliberation of that portion of the request last week. A decision is expected concurrent with the deferred energy decision.

With approval of the $16 million dollar plan, that portion of customers bills would increase 2.4 percent overall, but actually decrease by 4.8 percent for residential electricity customers. The plan shifts more of the operating cost burden to industrial and commercial customers.

Together the increases would result in a 12.4 percent increase for all customer classes, with a 3.5 percent increase for typical residential customers, the company said.