Who will pay $20 million in utility costs?

CARSON CITY -- State regulators have scheduled hearings on a bid by Sierra Pacific Power Co. to have its Northern Nevada electricity customers cover nearly $20 million of a settlement with Enron Corp. over disputed power supply contracts.

The money, representing settlement costs plus legal fees, would be collected over four years and is part of an overall $90 million settlement by Reno-based Sierra and its Las Vegas-based sister utility, Nevada Power Co., to end a dispute that dated to 2002.

While the state Public Utilities Commission's staff backs the proposal by Sierra, the state's consumer advocate for utility customers has challenged the plan on grounds it stems from imprudent power-purchasing by Sierra during the Western energy crisis of 2000 and 2001.

Consumer Advocate Eric Witkoski says Sierra should eat the nearly $20 million because the company didn't follow its own purchasing strategies and bought too much power during the crisis.

"As a result they incurred excessive costs," Witkoski said.

"In our review, we feel these contracts shouldn't have been entered into," he added.

Michael Yackira, president of the electric utility's parent Sierra Pacific Resources, counters, "It's reasonable to expect the customers to pay."

Yackira adds that the two utilities were able to settle for less than a third of the $330 million that Enron had been seeking in court. The decision ended the dispute and the prospect of an uncertain outcome had the court battle continued.

Several wholesale power suppliers, including now-bankrupt Enron, terminated contracts with the Nevada utilities during the energy crisis, saying that they were not satisfied with financial assurances.

Enron, which was already in bankruptcy court, had said the $330 million was the difference between the price it could get selling power on the wholesale market and the price quoted in the contracts with the Nevada utilities.

The hearings will be held Aug. 7-10.