Regulators Review Failed Nevada Utility Project

Sierra Pacific Power Co. asked Nevada regulators for authority to collect $42 million from ratepayers for a clean-coal generating experiment that failed - but opponents said Friday the request should be denied and the utility should refund $50 million it already got.

There was no immediate decision by the state Public Utilities Commission on the request involving Sierra's Pinon Pine gasified
coal project. A PUC spokesman said a ruling would be issued following a review of the testimony Friday and voluminous paperwork filed in the case.

During the hearing, Phil Williamson of the state Bureau of Consumer Protection detailed various costs involving the project, which already has received more than $200 million in taxpayer and ratepayer dollars, and said the BCP wants a $92 million disallowance.

Asked by Sierra Pacific attorney Julia Sullivan to elaborate on the proposed disallowance, Williamson said it represented $50 million the Reno-based utility already received plus the $42 million it's trying to get the PUC to approve.

Sullivan questioned the accuracy of the figures presented by the
consumer advocate's office, at one saying she was "startled and
stunned" by some of the numbers presented at the hearing.

Sierra Pacific Power attorneys also said the utility's decision to try the gasification technology was "prudent as a matter of law" and Sierra is entitled to recover all its "just and reasonable costs."

But the consumer advocate's office, headed by Eric Witkoski, said the request for $42 million should be rejected because the utility already has been allowed enough recovery, and $50 million that was authorized previously should be refunded to customers.

More than half of the funding for the Pinon Pine gasified coal project came from the federal Department of Energy. That agency's records show it's a prime example of investments of public funds in failed alternative energy ventures around the nation.

Construction on the Pinon Pine project, part of the utility's Tracy power station east of Reno, began in early 1995. The project, plagued by cost overruns, came on line in late 1996 - but as a conventional, gas-fired power plant. The experimental gasified coal system was shut down. Total costs for the entire plant ran more than $340 million.

Sierra Pacific Power continues to run the conventional side of the plant, and is expanding other gas-fired generating facilities at its Tracy station.

Besides the $168 million the Reno-based utility got from the federal Energy Department, Sierra Pacific already has been authorized by the PUC to collect more than $110 million from its ratepayers for both the conventional and experimental Pinon Pine projects.

The commission previously denied Sierra Pacific's request for the additional $42 million, but the utility appealed and won a court order in 2006 that led to the new commission hearings.

Because the money sought by Sierra would be collected over several years, the impact on customers' monthly bills would be slight. If the company wins its latest request, the average residential customer would pay only a few dollars more per month.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

AP-NY-01-11-08 1656EST


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