Is it an offer? Ask the lawyers

At a utility hearing Wednesday, a Nevada Power Co. official gave participants a short course in contract law on the legal meaning of the word "offer."

Nevada Power attorney Richard Trachok made the comments in explaining why the utility rejected a July 31 proposal by LS Power of New Jersey to sell Nevada Power a generating plant at a price that would be about $235 million less than the cost of building a new power plant.

Trachok said LS Power failed to make a legally binding offer to sell a 520-megawatt gas-fired power plant to Nevada Power Co.

In addition, "the information that was provided (by LS Power) isn't new," Trachok said. "LS just wanted to reopen negotiations, and it's not significant, because it's not an offer."

An LS Power executive disagreed with Trachok's legal interpretation.

The proposal "was intended as, and remains, a legally binding offer to sell" the 5-year-old Apex Combined Cycle Unit, said James Bartlett, president of LS Power affiliate Broadway Gen Funding.

Bartlett made the comment in a letter dated Wednesday that the Review-Journal obtained.

The issue arose when the staff of the Public Utilities Commission asked for permission to change its testimony to include new information it obtained and clarified over the past two weeks.

William "Buck" Rogers, chief financial officer of Nevada Power parent Sierra Pacific Resources, filed written testimony rejecting staff suggestions that the utility tried to keep the LS Power proposal "under wraps."

More importantly, the commission staff argued that the Apex plant is a better option than building a new Harry Allen power unit costing $780 million.

Nevada Power previously considered buying the LS Power plant, which is north of Las Vegas, but decided that Reliant Energy's Bighorn Generating Station had a better price and location. Neither Bighorn, a 598-megawatt power plant south of Las Vegas, nor LS Power's plant were considered as an alternative to the Harry Allen plant, Trachok said.

"Sierra Pacific Resources decided it would be very nice to have all three of these facilities," Trachok said, "but it simply couldn't afford them all."

The utility said it could afford to buy the Bighorn plant and to continue developing the Harry Allen plant, which is scheduled for completion by 2011.

Utilities commission Chairwoman Jo Ann Kelly agreed to permit the commission staff to add comments about the LS Power proposal.

She has not yet decided whether to accept the arguments of staff or the utility, however.

The power plants are being discussed in hearings on proposed amendments to the integrated resource plan for Nevada Power.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.