Nevada regulators ordered Sierra Pacific Resources' two utilities — Sierra Pacific Power and Nevada Power — to conduct a cost/benefit analysis of joining a regional transmission organization (RTO), according to David Chairez, spokesman for the Nevada Public Utilities Commission (PUC).

The Federal Energy Regulatory Commission (FERC) is promoting mandatory RTOs as part of its plan to restructure wholesale electricity markets. The idea is to increase reliability by improving electricity transmission between states and lower consumer rates through increased competition among suppliers. Regulators from several states, especially in the West and Southeast, say the design doesn't take their regional needs into account and that joining an RTO should be voluntary.

Consulting firm Tabors and Caramanis has analyzed whether the two utilities should join RTO West, which is being organized for utilities in the Pacific Northwest and British Columbia. Some interested parties have said Sierra Pacific Power should join RTO West, while Nevada Power should join the WestConnect RTO, which will serve Southwestern utilities. The state commission's order directs both utilities to weigh the benefits of joining either RTO, said Chairez.

Sierra Pacific's service territory is in the heart of RTO West's control region, and has three transmission inter-ties that connect to RTO West utilities. WestConnect is attempting to create a for-profit RTO, which the Nevada PUC order said is “troubling.” Still, Nevada Power is part of a reserve power-sharing group comprised of utilities in the Southwest, and four of its five transmission interties connect to WestConnect or the California grid operator, the order said.

The order outlined several principles the state commission wants an RTO to possess before they will allow the utilities to join. They include the state having jurisdiction over transmission planning as well as bundled retail transmission rates and assets; voluntary participation in the RTO; and no divestiture of transmission assets.

“We need to take an optimistic but cautious approach on regional transmission issues,” said Don Soderberg, chairman of the Nevada PUC. “There may be benefits to Nevada's electric utilities joining an RTO, but we need to avoid unintended consequences of the promising but unproven concept.”

There is no deadline by which the utilities must report back to the commission on the findings of their analysis, Chairez said. Both can recover all associated costs from the analysis, he said.
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