Opinion ID: 2631746
Heading Depth: 1
Heading Rank: 13

Heading: Nevada Power defends its purchasing practices

Text: Nevada Power presented evidence at the PUCN hearing in defense of its purchasing practices to demonstrate that it had acted prudently in purchasing $922 million of energy during 1999 through the middle of 2001. [15] More specifically, Nevada Power argued that the constant flux in the market due to the State's policy of utility regulation, subsequent deregulation, and renewed regulation, coupled with the following four events, supported its argument that its practices and transactions were prudent in the relevant time period because it was not clear that it would be required to provide customers with power beyond 1999, or if it was so required, for how long. First, Nevada Power noted that it had presented the PUCN with an integrated resource plan in 1997. After looking at this plan, the PUCN approved Nevada Power's procurement practices for 1998-2000. From this, Nevada Power argued that the 1997 plan clearly indicated its reliance upon procurement of short-term purchased power. Second, Nevada Power argued that the PUCN's rulemaking response to deregulation legislation helped to obscure an already unclear purchasing environment. [16] About a year after the deregulation legislation was passed, the PUCN issued its first proposed provider of last resort regulation. [17] This regulation did not contain a requirement mandating that Nevada Power bid for the provider of last resort function. Additionally, the regulation did not contain any incentive or requirement concerning any need for Nevada Power to purchase power beyond December 31, 1999. Third, Nevada Power argued that the PUCN had further complicated the market by issuing a revised proposed regulation that created two provider-of-last-resort services. One was a transitional service for customers with good credit and the other was a universal service for customers who had credit concerns affecting their eligibility for service from private sellers. This proposed regulation designated Nevada Power's affiliate as the universal provider of last resort. In response, Nevada Power argued that uncertainty over load requirements complicated the decision of whether to make long-term power purchases. Fourth, Nevada Power pointed out that in April 1999, the PUCN issued an order regarding who would be the provider of last resort once the retail market opened to electric customers. Nevada Power argued that this order explicitly signaled that Nevada Power would not be the provider of last resort once the retail market did open. In sum, Nevada Power argued that disagreements over the provider of last resort regulations between Nevada Power and the PUCN during the summer of 1999 through the summer of 2000 made it reasonable for Nevada Power to forgo any long-term purchase power agreements. Nevada Power was concerned that many of its customers would be transferred to another provider of last resort, that the timing of the retail market's opening would change, and that provider of last resort rules would change.