Agency backs down on changes in Hoover Dam rules

WASHINGTON -- A lawsuit that would have pitted Nevada against the federal body that delivers low-cost hydropower from Hoover Dam was averted last week when the agency backed down on a plan to put in place new power marketing rules by the end of the month.

A regional manager for the Western Area Power Administration told senators at a hearing on Thursday that his agency would delay the changes from May 27 until the end of the year.

The delay would give Congress time to push through legislation that updates power agreements on terms favored by Nevada and the dam's other large customers in Arizona and Southern California.

They buy electricity at cost after having invested millions of dollars in generator upgrades over the past 20 years, and fear the changes the Western Area Power Administration is considering might impact the amounts of electricity allowed to be passed on for sale to local power companies, utility districts and industrial users within the states.

Any changes would not go fully into effect until 2017 when current contracts expire, said Jim Sala, interim executive director of the Colorado River Commission that manages Nevada's shares of water and power from Hoover Dam.

"We don't know how that would play out, because they have not done the process yet," Sala said. "At least there is a concern among some of our customers that they could rather significantly realign allotments going forward."

If there were any alterations to the Hoover contracts, Sala said they likely would not be felt on electricity meters in Las Vegas, where NV Energy draws only about 5 percent of its baseload from dam-generated power.

Customers of smaller utilities in Lincoln County, Overton and Boulder City might feel a pinch depending on any allocation changes since they draw larger shares of their power from the dam, he said. If access to low-cost hydropower were reduced, it would be necessary for those utilities to buy more power on the more expensive open market, he said.

Darrick Moe, WAPA regional manager for the Desert Southwest, said Thursday that the agency is extending the public comment period to Sept. 1 on some of its proposals and delaying finalizing others from May 27 until Dec. 31.

Moe said it had received requests for the delays to give Congress more time to consider legislation. The agency's proposals would become moot if lawmakers pass their own bill.

The agency's decision came within days after a representative of Nevada Attorney General Catherine Cortez Masto said at a congressional hearing on May 5 that the Western Area Power Administration plan would provoke an immediate court challenge if it was put in effect.

"Western is proposing to take an approach that varies dramatically" from the preference of its customers, said Ann Pongracz, senior deputy attorney general.

The power marketing agency also heard from unhappy members of the Nevada congressional delegation, including Sen. Harry Reid, D-Nev., and Rep. Joe Heck, R-Nev.

"Our office has communicated Senator Reid's unhappiness with the Western Area Power Administration and the Department of Energy regarding the initial proposal," spokesman Zac Petkanas said. "We will be following up with a formal bipartisan letter in the near term."

Heck at the May 5 hearing scolded WAPA, saying it was committing a "systematic overreach."

"That is one of the issues we are addressing in this Congress," he said, adding afterward that the agency was engaged in a "power grab."

At stake is the renewal of allocations that have governed the distribution of electricity from the massive water and power supply project that transformed the Southwest when it was completed in 1936.

There have been only two power contracts covering the past 80 years, with the latest set to expire in 2017. The states of Nevada and Arizona and interests in Southern California that are the dam's main customers negotiated a new 50-year agreement and brought it to Congress for approval.

But on April 27, the Western Area Power Administration in a Federal Register notice said it would offer only 30-year contracts, and would claim authority over marketing electricity in the region and to Indian tribes and other potential new customers, a power that has been shared with the lower river states.

Another part of the plan opposed by the states would set aside 30 megawatts of Hoover Dam power for "project integration" in case the Western Area Power Administration needed it to address the needs of customers of other dams in its marketing system.

While a small part of Hoover Dam's maximum rating of 2,074 megawatts, 30 megawatts is enough electricity to power 23,804 homes for a year, according to the Energy Information Administration.

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760.