Utility group puts burden on customer

      A utility investor group told state legislators Tuesday that customers, not stockholders, should pay for uneconomic investments at electric utilities.
      Representatives of the Utility Shareholders Association of Nevada Inc. explained their position during a hearing of the Assembly Government Affairs Committee.
      The committee was considering legislation backed by the Public Service Commission to deregulate electric utilities.
      Under Assembly Bill 366, investor-owned electric utilities, such as Nevada Power Co. and Sierra Pacific Power Co., will lose their monopolies and face competition.
      A key question is whether stockholders or customers should pay for the cost of so-called stranded investments, which regulators once required but are no longer competitive.
      In Nevada Power's case, the stranded investments are expected to include long-term contracts with independent power producers for electricity. Nevada Power may buy out the contracts because it can buy electricity cheaper from other sources now.
      Utility customers should pay all of the costs for stranded investments, said James Kropid, a board member of the Utility Shareholders Association and former president of the local telephone company in Las Vegas.
      "These costs have already been deemed necessary" by state regulators, Kropid told the committee. Forcing utilities to write off the stranded investments could be called "confiscatory," he said.
      "To disallow stranded cost recovery would be unconstitutional," Joyce Newman, shareholders association executive director, said in a later interview.
      Investors would not have purchased utility stocks if they realized utilities were being forced to make investments that they might not recover through rates, she said.
      The PSC said AB366 calls for stranded investment costs "to be fairly apportioned between the utilities' shareholders and ratepayers."
      PSC Commissioner Judy Sheldrew, who presented AB366, took no position on the issue. She said critics argue that stockholders have already recovered their fair share through rates charged in the past.
      Thelma Clark, a spokeswoman for the Nevada Senior Coalition, opposed the proposal to make customers pay for stranded investments.
      Clark, however, backed deregulation of electric utilities. "Deregulation is a fact of life," she said. "We can achieve it here and now in Nevada or sit back and let the federal government and our neighboring states achieve it for us."
      Clark praised the PSC's consumer staff for resolving disputes between residents and mobile home parks that have master meters and charge park residents for power.
      Larry Hawke, a representative of the Nevada Mining Association, urged the Legislature to specify a date when competitors may enter former monopoly markets.
      Charles Lenzie, chief executive officer of Nevada Power, was present, but no one spoke on behalf of the utility at the committee hearing.