By JOHN G. EDWARDS
Oct. 17, 2000 (www.lvrj.com)Nevada's two major electric utilities are asking state regulators to authorize them to borrow an estimated $350 million to $400 million more to cover the rising cost of wholesale power and fuel for power generation.
Sierra Pacific Power Co. and Nevada Power Co. each year ask the Public Utilities Commission to authorize them to issue bonds and stocks, explained Mark Ruelle, chief financial officer for Sierra Pacific Resources, the utilities' parent.
During the next year, electric power companies estimate they will need to borrow $350 million to $400 million more next year to cover the increasing cost of fuel and wholesale power.
"All of our other costs are down," Ruelle said. In a related development Friday, the companies asked the PUC to approve another round of monthly rate increases to offset some of the costs of fuel and wholesale power. Nevada Power, which serves the Las Vegas area, is asking the state to allow it to boost rates by $15.8 million or 1.4 percent yearly starting Dec. 1.
Residential rates would be boosted 1.3 percent or $1.04 a month. In July, the PUC approved a so-called "global settlement" agreement reached by state officials, the utilities and major casino operators for deregulation and rate increases. Since that agreement, Nevada Power has filed to raise rates by a total of 10.3 percent for residential customers.
Sierra Pacific Power, which serves Reno, seeks to boost rates of all customers by $1.4 percent or $7.7 million in its latest rate case. While customers may complain about continuing increases, the PUC staff believes the rate increases would have been higher had the agreement not be reached. Nevada Power's annualized increase would have been $90 million higher had the settlement not limited the amount of monthly increases the utility can receive, according to the PUC staff. Sierra Pacific Power would have been able to recover $3.5 million more.
The electric utilities may have an opportunity to recover some of those expenses later. Because of the rising cost of fuel and purchased power, the two utilities are seeking state authorization to borrow $100 million more from banks and Wall Street on a short-term basis, Ruelle said. They are seeking authorization to borrow $1 billion more on a long-term basis.
About one-third of the $1 billion in long-term debt authorization would be used for refinancing existing debt, Ruelle said, with the remainder going for additional or new debt. Ruelle said the companies don't intend to borrow the maximum amount authorized in short-term and long-term loans at the same time. A decision by the PUC to approve increased borrowing won't guarantee that the company is able to recover the extra amount through rate increases, he said.
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