Energy plant ruling favors ratepayers

Regulators decided Thursday that a Nevada utility can collect only about $6 million of the $42 million it sought from ratepayers for a failed clean-coal generating plant - that already has netted more than $200 million in taxpayer and ratepayer dollars.

"The ratepayers should not bear any more of the cost" of the Sierra Pacific Power Co. project, Public Utilities Commission Chairwoman Jo Ann Kelly said, adding, "To do so would be unjust and unreasonable."

The commission's order, approved unanimously, states an unregulated liability company, or LLC, was set up in 1995 as part of the Reno-based utility's Pinon Pine gasified coal project, and that move "shifted all of the risk to the shareholders of companies over which the commission had no jurisdiction." Sierra Pacific's argument that costs of the gasifier would be the same without the LLC "is grossly misplaced," the order states, adding, "For SPPC to argue that the ratepayers were somehow shielded from the risks of the LLC venture but now are to be held responsible for the remaining costs of the failed gasifier is absurd."

There was no immediate comment from Sierra Pacific on the commission decision. During a January hearing on the plan, Sierra Pacific Power attorneys argued the utility's decision to try the gasification technology was "prudent as a matter of law" and Sierra was entitled to recover all its "just and reasonable costs."

The PUC order didn't go as far as the state Bureau of Consumer Protection had hoped. The bureau's attorneys argued that the entire $42 million should have been rejected and the utility should refund $50 million it already got in an earlier PUC ruling.

The utility also got $168 million for the project 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.

Sierra Pacific Power continues to run the conventional side of the plant. Combined costs for the conventional and experimental elements of the plant ran more than $340 million.

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 a new commission review.