Opinion ID: 3040019
Heading Depth: 4
Heading Rank: 3

Heading: Nevada Power Companies: Nevada Power and

Text: Sierra Pacific The challenge brought by Nevada Power and Sierra Pacific seeks to modify over two hundred forward market contracts with various energy sellers for supply of 25-100 MW blocks of power.18 These contracts range in price from $33/MWh to $290/MWh, and were entered into in 2000-2001 with ten energy companies. FERC found that these contracts were standard products arranged through independent third-party brokers, and concluded that Nevada Power and Sierra Pacific were price-takers, meaning that those utilities took the price the market yielded rather than bargaining or demanding a certain price. Nev. Power Co. (June 26 Order), 103 F.E.R.C. ¶ 61,353, at ¶ 62,398 (June 26, 2003). According to FERC, the Nevada companies did not pursue purchase of a diverse mix of products and therefore failed to hedge the risk that spot market prices might fall. Id. FERC also found that the Nevada companies pursued an aggressive procurement strategy, purchasing more power than necessary to serve the expected load of their local customers. Id. FERC suggests that the Nevada companies were trying to buy as much power as they could before sellers discovered their precarious financial situation. Id. FERC found that if these contracts are not modified, the resulting increase to ratepayers would be no more than five percent. Id. ¶ 62,397. The Nevada companies recognize that the retail rates have decreased since they agreed to the challenged contracts, but they maintain that Nevada customers will still pay significantly more than they would pay if the contracts were modified to reflect just and reasonable rates. Order on Rehearing, 105 F.E.R.C. at ¶ 61,986. Nevada Power 18 The Nevada companies recently settled their disputes with Morgan Stanley, El Paso Merchant Energy, and Enron Power Marketing. These settlements have no bearing on the legal issues we address. PUBLIC UTILITY DISTRICT v. FERC 19575 and Sierra Pacific therefore seek to modify their contracts with the energy sellers. Nev. Power Co. (April 11 Order), 99 F.E.R.C. ¶ 61,047, at ¶ 61,185 (Apr. 11, 2002). Nevada Power is seeking relief for contracts that had not yet gone to delivery at the refund effective dates set by FERC (between late January and April of 2002, depending on docket number).19 Id. ¶¶ 61,185, 61,192. 19 Upon setting a section 206 complaint for hearing, FERC establishes a “refund effective date,” which is a date establishing the period from which complainants may attain relief should the proceedings extend beyond that established date. In other words, if a party makes a complaint on January 1, 2004, but FERC does not set the complaint for hearing until July 1, 2004, FERC may establish a “refund effective date” of March 1, 2004, so that the complainant will not suffer from the agency’s delay or from continued agency proceedings. PUBLIC UTILITY DISTRICT v. FERC 19577 Volume 2 of 2 19580 PUBLIC UTILITY DISTRICT v. FERC