Tight labor market challenges power project

Sierra Pacific Resources expects that the major power plant it proposed last week near Ely in White Pine County will employ several thousand during construction.

The problem? At last count, the tiny labor force ofWhite Pine County only 4,063 workers including exactly 182 people who were looking for work.

In the area around Elko, the nearest city of any size, only 896 people are jobless out of a labor force of nearly 24,000, the state Department of Employment, Training and Rehabilitation reports.

In short, Sierra Pacific may bump into the same problem that's troubling the booming mining industry there aren't enough hands for all the work in rural areas of the state.

"That will be one of the challenges," acknowledges Walt Higgins, the chairman and chief executive officer of Reno-based Sierra Pacific Resources.

At the same time, he says, the construction boom as well as the ongoing employment from the $3 billion power plant and transmission project will help stabilize the economy of White Pine County.

Even without the new power plant the largest energy project in the state since the Hoover Dam the economy ofWhite Pine County has been strong since the reopening of the Robinson Mine, a copper producer, a couple of years ago.

The mine employs about 460.

As mining companies throughout northeastern Nevada struggle to find enough workers, they say a nagging problem is the lack of housing in the region, even if workers can be found.

Higgins says that Sierra Pacific is prepared to work with White Pine County to help address the housing and social issues that are likely to accompany the construction boom.

The boom will be all the sharper because another power plant also is expected to begin construction in the area, perhaps as early as this year.

LS Power Associates LLC of East Brunswick, N.J., plans a 1,600-megawatt power plant near Ely, and it's said construction of that plant might employ as many as 600 workers.

In fact, Sierra Pacific initially may have wanted to buy the output of the LS Power plant.

The company said it decided to move forward with its Ely project after discussion with out-of-state developers stalled.

A spokesman for LS Power said his company wouldn't discuss whether it had been in talks with Sierra Pacific, but said it is moving forward with its plans no matter what Sierra Pacific decides to do.

Higgins says Sierra Pacific probably will raise much of the $3 billion it needs for the construction through the sale of bonds.

Company executives expect the company, which flirted with bankruptcy in 2002,will return to investment grade by the time it needs to tap the credit markets for the new plant.

Sierra Pacific will use the money to build two 750- megawatt units, with the first coming on line in 2011 and the second in 2014.

It also may build two coal-gasification units, each generating 500 megawatts of power, at the site.

A transmission line traveling 250 miles south from the new plant, meanwhile,would provide the first ties between the electric grids in the northern and southern parts of Nevada.

The company plans to fire the plants with coal from Utah mines.Higgins says Sierra Pacific hasn't signed up a supplier for the new plants.

Because the chemistry of coal is slightly different from one mine to the next, he says a supply agreement will be inked before final planning can begin.

When the new facilities come on line, Sierra Pacific expects to be able to meet about 75 percent of its customers' demand on peakusage days from its own resources.

Currently, the figure is about 50 percent, and the company needs to buy power on the wholesale markets to make up the difference.