NV Energy seeks regulatory approval to consolidate operations

With the completion of the One Nevada transmission line (ON Line) only about six months away, NV Energy (NYSE:NVE) has filed an application with the Public Utilities Commission of Nevada (PUCN) seeking approval to consolidate its two operating subsidiaries, Nevada Power and Sierra Pacific Power Company, into a single jurisdictional utility (Docket No. 13-05056).

“One of the big drivers is the One Nevada transmission line that will connect us for the first time ever late this year,” an NV Energy spokesperson told TransmissionHub June 24. ON Line is a 500-kV, 235-mile line between the Harry Allen substation at the northern edge of Las Vegas in Clark County to the Thirtymile/ Robinson Summit substation near Ely in White Pine County, where it will tie into the utility’s northern system.

The application, presented in five volumes on May 31, included 1,145 pages of confidential material, including unredacted versions of reports to NERC that qualify as critical energy infrastructure information. The filing of the application and its June 5 acceptance by the PUCN, along with an application filed with FERC on May 31, represent the beginning of the last phase of the merger of the two companies that began in 1999.

The company is seeking PUCN approval to modify the legal and regulatory structures of Sierra and Nevada Power by merging Sierra into Nevada Power and renaming the surviving utility NV Energy Operating Company (NVE). The company is also seeking permission to transfer all Sierra electric and gas utility assets, including generation assets, to Nevada Power, where they will continue to be used to provide utility service to the customers of NVE.

“If approved, [the merger] will result in fewer regulatory filings and modest reductions in cost of service, and will facilitate accounting for the benefits associated with ON Line,” Michael Yackira, NV Energy President and CEO said in a statement.

The merger would not affect the makeup of the company’s board of directors, the assignments of the individual directors, or the assignments or responsibilities of the elected officers of NVE, Nevada Power, or Sierra, the company said.

The company has already consolidated numerous activities, including back-office and operational functions, which it said are resulting in benefits of its customers. Notably, operational functions include consolidations in power generation, resource optimization and transmission. The requested merger will bring additional efficiencies, the company said.

In its application, the company included mechanisms it seeks to put into place to account for costs going forward and which will have no impact on customer rates, the company said.

However, it appears not everyone is willing to accept that assertion at face value. The Nevada Attorney General’s Bureau of Consumer Protection on June 17 filed a Notice of Intent to Intervene in the proceeding.

While the filing of the notice indicates the office potentially has concerns about the impact the consolidation will have on the utility’s 2.4 million customers, a spokesperson for the Attorney General’s office declined to provide any details when contacted by TransmissionHub on June 24.

Interested parties can file petitions for leave to intervene through July 3. The first prehearing conference in the matter will be held July 9 at the PUCN’s offices in Las Vegas and via videoconference to the PUCN’s office in Carson City, Nev. The purpose of the prehearing conference is to formulate and simplify issues involved in the proceeding, and determine the need for a hearing and procedural schedule.

If approved, the proposal will be in effect when the ON Line transmission project is completed in December of this year.  The company would then file a proposed combined general rate case on June 2, 2014, with an effective date of Jan. 1, 2015.

The consolidation effort should not affect the proposed purchase of the company by MidAmerican Energy Holdings. “They’re totally isolated, separate transactions. They’re offering to buy the company from our shareholders and the earliest that transaction will close is 1Q14,” the spokesperson said.