Purchasing staffers at Sierra Pacific Power nailed down a deal last week to buy 70,000 feet of conduit a product that the Renobased utility uses in big quantities.
Even though Sierra Pacific paid $2.71 a foot for the material as recently as 2004, staffers were ecstatic when they got a price of $5 a foot last week.
They were able to track down conduit that had been ordered by another utility, but returned to a distributor when it wasn't needed.
If Sierra Pacific had placed a new order, the cost would have been $7 a foot a difference of more than $180,000 over last year's prices.
Sharp spikes in the costs of construction materials, a painful fact of life for builders, developers and anyone who's bought or rented space in the past couple of years, soon will be showing up electric bills as well.
Sierra Pacific last week asked the Public Utilities Commission of Nevada for a $27 million rate increase to cover higher operating costs.
In a region that is among the fastest growing in the nation, rising construction costs account are a significant part of the increase in operating costs.
In 2004 alone, Sierra Pacific Power installed 11,200 new electric meters on homes and businesses, said President Jeff Ceccarelli.
That's a 12 percent increase over the previous year.
Each of those new meters requires a bundle of construction materials.
Sierra Pacific says it's invested $200 million in infrastructure in the region in the past two years.
And the effects of higher construction costs are likely to be felt by Sierra Pacific customers for several years.
Here's why: The rate increase the company filed last week reflects its costs in 2004.
That was a year in which metals costs think about the amount of copper in electric lines rose sharply.
In 2005, meanwhile, rising oil prices have been reflected in higher costs for PVC resins, heavily used by Sierra Pacific in conduits and other plastic products.
Faye Andersen, a spokeswoman for the utility, says suppliers have sent notices of price increases then followed them up with a second, and sometimes a third, notice.
On top of everything, suppliers also are beginning to levy fuel-related surcharges, Andersen says.
Because utility rates in Nevada are set on historical costs, the effects of some of the recent price increases may not be felt by the utility's customers until future rate requests are filed.
In announcing its most recent filing, which would amount to 3.4 percent for electric customers and 5.4 percent for gas customers, Sierra Pacific noted that the new rates don't include provision for higher natural gas prices.
Those increases are covered in separate rate filings in which Sierra Pacific passes along price increases or decreases, if they ever occur to its customers on a dollar-fordollar basis.
Ceccarelli has described this winter's outlook for natural gas prices as "not pretty."
