Sierra Pacific shareholder not violating state law, analysts say

Sierra Pacific Resources' largest shareholder, a New York investment firm, isn't violating a state law that prohibits investors from owning more than 25 percent of Sierra Pacific's shares, analysts at the Public Utilities Commission say.

The three-member commission will consider the report from the PUC staff today at a 9:30 a.m. meeting.

Horizon Asset Management of New York owns 17 percent of the outstanding shares of Sierra Pacific, the holding company for Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno, according to the memo from staff counsel Alaina Burtenshaw.

Kinetics Asset Management, which shares offices, employees and a key officer, holds another 10 percent of the company's shares.

The PUC staff, however, said it found "no legal connection between Horizon and Kinetics" under Nevada state law.

Although the value of Horizon's shares was $544.7 million on Tuesday, the staff concludes that Horizon doesn't exceed the 25 percent ownership level in a Nevada utility that requires PUC approval.

Western Resource Advocates representative Charles Benjamin, who first reported the ownership records about Horizon and Kinetics, questioned the staff's conclusion. Benjamin cited a footnote in the report.

The footnote says Peter Doyle, CEO and chief investment strategist of Kinetics, also is a director, vice president and portfolio manager at Horizon. The two firms share several employees and office space although Kinetics has separate corporate headquarters, according to the report.

"You begin to wonder how separate these two entities are," Benjamin said. "It's unclear whether staff is saying they have no further concerns (about Horizon's stake in Sierra Pacific)."

The PUC staff report also concludes that the commission has the authority to request copies of books and records of the investment companies under federal law.

The commissioners "ought to exercise their right to access the books and records which they are allowed to do apparently," Benjamin said.

"It seems to me there's a lot of moving parts here in play, and there's a lot of unanswered questions," he said.

Benjamin, Nevada director for Western Resource Advocates, said he became concerned about Horizon's and Kinetics' large holdings of Sierra Pacific shares because the investment companies show an interest in companies that build coal-fired power plants.

Sierra Pacific Resources proposes to build the $5 billion coal-fired plant at Ely and a related transmission line. Benjamin's group opposes building new coal plants, because they throw off large quantities of carbon dioxide, which scientists say contributes to global warming.

The environmental leader said companies often try to please their major investors and suggested the large investments by Horizon and Kinetics might influence plans for the coal-fired plant at Ely.

State consumer advocate Eric Witkoski and a spokesman for Horizon didn't return calls for comment on the staff legal report. A Sierra Pacific spokeswoman declined comment.

The commission agenda suggests the commission won't vote on the Horizon-Kinetics matter today but could act later.

The Federal Energy Regulatory Commission also is reviewing the ownership stakes of Horizon and Kinetics. The PUC staff urges the state commission to monitor the FERC case.

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