State utility regulators on Friday agreed to allow an environmental group to participate in hearings on plans to build the largest power plant in Nevada. But the Public Utilities Commission refused to allow an independent power producer, which has a competing project, to intervene.

The debate focuses on plans by Nevada Power Co. and Sierra Pacific Power Co. to build the Ely Energy Center, a $3.7 billion coal-fired power plant near Ely and a related transmission line.

New Jersey-based LS Power, an independent power company that proposed a similar project before the utilities unveiled their project in January, asked the three-member to commission to reconsider its decision to exclude LS Power from participating in a review of the utilities' project.

Utilities Commission Chairman Don Soderberg originally excluded Nevadans for Clean and Reliable Energy, or NCARE, a group of environmental organizations, from participating in hearings on the coal-fired power plant although he permitted them to join the case on renewable energy and energy conservation.

On Friday, Soderberg moved to waive legal requirements and regulations and to permit the environmental group to join in all aspects of the utilities' Integrated Resource Plan case, including the power plant. The motion carried 2-1 with Commissioner Jo Ann Kelly dissenting.

Commissioners voted 3-0 to continue barring LS Power from participating in the Ely Energy Center review.

Soderberg maintained his previous position on LS Power. He favored allowing LS Power to participate in discussions about transmission lines and substations but called for prohibiting them from intervening in issues surrounding the power plant.

"I think we did the right thing," Soderberg said. "We recognized that there's a difference between Nevada citizens who have a point of view (such as environmentalists) and others who have a financial interest."

Representatives for LS Power could not be reached for comment, but Soderberg suggested he expects LS Power to appeal to state district court.

Soderberg said he was concerned independent energy companies could gain access to confidential information about a utility project and use that information to win bids or to gain an advantage in talks with the utilities.

The chairman said that LS Power has promised it could save Nevada electric customers $600 million over three years, because LS Power's project is three years ahead of the utilities' Ely Energy Center. But Soderberg said LS Power has refused to supply the commission staff with the numbers it used to calculate those savings.

Although Nevada Power and Sierra Pacific Power need commission approval for the Ely plant, LS Power does not need authorization from the commission to build a power plant, he said.

Analysts, however, question whether LS Power has a viable project if the Nevada utilities are going to build their own power plant at Ely.

The motion to allow NCARE to participate provides that Soderberg can again exclude the environmental group if the group tries to broaden the issues under consideration, takes a contentious stance or make excessive or time-consuming requests for data from the utilities.

"We're very pleased," said Peggy Maze Johnson, executive director of Citizen Alert, one of the environmental groups.

Although Soderberg's motion said the decision should not be considered a precedent, Kelly said she worried that it could be argued that the waiver governed future cases.

"I do believe in the cause (of environmental protection) very strongly," Kelly said. But she said that the utilities commission staff adequately reviews environmental issues.