Sierra Pacific Resources has decided that it's not so bad after all to be a boring, publicly regulated utility.
The Reno-based company, which owns Sierra Pacific Power in the north half of the state and Nevada Power in the Las Vegas area, is high-tailing it out of non-regulated business back toward the highly regulated world it knows best.
Walt Higgins, the chairman and chief executive of Sierra Pacific Resources, said that the utility company feels it's exposed to too many risks when it's in businesses that aren't regulated by the Nevada Public Utilities Commission.
The irony in that? It was a decision by those very regulators in early 2002 that plunged Sierra Pacific Resources into a financial crisis from which it's still struggling to escape.
It won't be cheap for Sierra Pacific Resources to leave behind its non-regulated businesses.
In the second quarter of this year, Sierra Pacific Resources took a $9 million write-down on its e-three subsidiary and took another $33 million charge to reflect the reduced value of its Sierra Pacific Communications subsidiary.
The two write-downs accounted for nearly a quarter of the company's $173 million loss in the second quarter.
Sierra Pacific Communications developed a 30-mile fiber-optic ring around Reno and another 50-mile ring around Las Vegas.
It also was involved in a financially disastrous joint venture with Touch America of Butte,Mont., to build a fiber-optic line from Salt Lake City to Sacramento.
That project's costs got out of control and spawned numerous lawsuits and claims from contractors.
In June,Touch America filed for bankruptcy protection, and Higgins said the bankruptcy filing is a major factor in the $33 million writeoff.
At the same time, the company said in an SEC filing that the market for fiberoptic service is "significantly oversupplied." About $14.7 million of the writedown reflects the reduced value of the company's fiber
rings at Reno and Las Vegas.
The e-three subsidiary, meanwhile, is an energy consulting outfit (the initials stand for "energy efficiency expertise") that also owns a cooling facility in downtown Las Vegas.
Higgins leaves little doubt that he'd like to get out of the non-regulated businesses entirely.
"We are actively attempting to wind those businesses down or sell them," he told analysts as Sierra Pacific Resources announced its big quarterly loss.
The write-offs, he said, are based on the company's best guess at the current value of the two non-regulated businesses.
Sierra Pacific Resources says it anticipates selling the e-three subsidiary during the current quarter.
A spokesman said negotiations with potential buyers are ongoing, although a company filing with the Securities and Exchange Commission estimates e-three will bring $2.2 million.
