The state Public Utilities Commission on Wednesday voted unanimously to intervene in a contract dispute between Nevada Power Co. and the Southern Nevada Water Authority.
The PUC will side with Nevada Power in the Water Authority's bid to have the Federal Energy Regulatory Commission delay by one year an electricity transmission agreement with the Las Vegas electric company that was scheduled to begin July 31.
State regulators took a similar position in a nearly identical complaint filed with FERC by Pinnacle West Energy Corp.
Pinnacle and the Water Authority have separate deals with Nevada Power to deliver power generated by the still-under-construction Silverhawk power plant at the Apex Industrial Park north of Las Vegas. The Water Authority has an option to purchase a 25 percent ownership share in the plant once construction is complete.
While the delivery deal was scheduled to begin last week, the plant is not expected to be completed until next year.
Pinnacle and the Water Authority claim Nevada Power's Open-Access Transmission Tariff allows for the delay of transmission deals. The PUC's intervention filing with FERC, however, said the delay in payment would cause a financial hardship for Nevada Power and, ultimately, its customers.
"A failure by the complaintant to honor the terms of its contract with Nevada Power will shift a significant financial burden, which was accepted pursuant to its contract, to Nevada Power," the PUC filing said.
In Wednesday's hearing, PUC Commissioner Don Soderberg questioned whether or not the clause in the transmission tariff allowing for delays included new projects.
Under the transmission tariff claim made by Pinnacle and the Water Authority, the companies would both be required to make one month's payment in order to secure an extension. That would cost the Water Authority $151,000. Pinnacle West would own about $450,000.
Nevada Power's response to the Pinnacle West challenge claimed that payment would not cover the losses the company would face over the next year because of the capital it spent increasing transmission capacity to meet the terms of the agreements.
"Unlike the case of service over existing facilities, where no costs are incurred in order to provide the service and thus no costs are incurred when there is a delay in the commencement of the service, Nevada Power expended considerable costs to construct the Centennial Project for Pinnacle West and its other new transmission customers," the filing said.
In the PUC hearing, Soderberg directed staff to examine the legal details of the transmission tariff and its relevance in the case.
In its filing with FERC, the Water Authority blasted Nevada Power for its interpretation of the transmission tariff section on allowable delays.
"NPC's newly announced interpretation of Section 17.7 -- an interpretation which is not visible to the naked eye upon perusal of that section -- has therefore effectively 'bushwacked' both (the Water Authority) and (Pinnacle West) by retroactively applying this new interpretation to them," the Water Authority said in the filing.
FERC has not announced a schedule for its ruling on either agreement.
Also at Wednesday's meeting, PUC commissioners Richard McIntire and Adriana Escobar Chanos criticized the state Bureau of Consumer Protection for changing its stance on issues before the commission.
The scolding came during the review of a BCP request to revise a PUC order related to the ongoing debate over Regional Transmission Organizations as a means of moderating the interstate flow of electricity resources.
The BCP had requested that the commission revise language in its order to disallow utilities from recovering their costs of exploring RTO membership except through the existing regulatory process.
Staff responded by saying the BCP had ample opportunity to clarify its position in workshops and comment periods. The commission unanimously denied the BCP's request, but not before commissioners took some shots at the bureau.
"There's a disturbing pattern with the BCP that they say one thing and, as time goes by, they say they didn't mean it," McIntire said. "They're trying to rewrite history."
Tim Hay, the state consumer advocate and head of the BCP, said the criticism came as a surprise.
"I'm actually totally puzzled by the whole thing," said Hay, who was not at the PUC hearing. "It sounds to me like they misunderstood or misconstrued the pleading."
Chanos said it is not the first time the BCP has requested such changes.
PUC staff later pointed to a May revision requested by the BCP to a draft order involving nine larger power users seeking to leave the Nevada Power Co. grid and buy their own electricity.
In that request, BCP questioned the commission's handling of rate projections in determining the impact on remaining customers if those power users left the system.
In PUC staff response, they claimed that the BCP had agreed to leave the accounting issues to the commission. "Now, the BCP argues that the commission does not have the authority to decide the issue," staff said in the response.
Hay said the bureau requested changes in that order because the lengthy process was allowing the original PUC projections to become outdated.
Despite the criticism, he said the BCP would continue to ask questions.
"We reserve the right to present differing opinions," Hay said.
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