Pair of investment firms won’t face investigation

State regulators on Wednesday decided not to start investigating a pair of related New York investment firms that some thought violated Nevada law against holding more than 25 percent of utility company Sierra Pacific Resources without prior regulatory approval.

But staff counsel Alaina Burtenshaw said one of the investment firms may have resolved the issue without Public Utilities Commission action. Kinetics Asset Management as of March 31 had reduced its stake in Sierra to 7.9 percent. Horizon Asset Management, a firm with close ties to Kinetics, owns 17 percent of Sierra's shares, but the total Sierra holdings at the two firms now is slightly below the 25 percent threshold, Burtenshaw told the commission.

The two firms previously held more than 25 percent of Sierra's shares.

The utilities commission is interested because Sierra Pacific Resources is the holding company for electric utilities Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno.

The three-member commission decided to open a case on the two firms but to use the case only to monitor investigation of Horizon and Kinetics by the Federal Energy Regulatory Commission. Commission Chairwoman Jo Ann Kelly said they could investigate the investment firms later but she saw no need to do so now.

The FERC is investigating to determine whether the two investment companies should have obtained federal approval before acquiring more than 10 percent of the shares at Sierra.

State consumer advocate Eric Witkoski said he was concerned because investors who hold large stakes in the company could exert control or influence over the regulated utilities.

The Nevada law has never been applied in the past, he said. "It's a case of first impression," Witkoski said. "That's why (the commission) staff struggled with it."

Kirby Lampley, director of commission regulatory operations, said that 80 percent of Sierra's shares are held by large institutional investors. The top 10 investors own 47 percent of company stock.

In recent months, Kinetics has owned about 10 percent of Sierra's shares. Some suggested that Kinetics is affiliated with Horizon, because it shares office space and some employees.

Peter Doyle, CEO and chief investment strategist at Kinetics and a Kinetics shareholder, also is an investor, director, vice president and portfolio manager at Horizon. The staff, however, "found no legal connection between Horizon and Kinetics" under the state law.

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