Green power initiative receives boost from Nevada governor
By John G. Edwards, Las Vegas Review-Journal -- July 10
Gov. Kenny Guinn on Friday filed documents in which he urged state utility regulators to adopt new rules and to support legislation that would help "green power" developers finance power plants.
The regulations and legislation would create a temporary charge on consumers'
bills that the utilities would collect and turn over to the trust to pay
renewable plant owners that sell electricity to the utilities.
The trust mechanism would be temporary and would be dismantled when the
utilities become financially stronger, said Richard Burdette, Guinn's energy
adviser, who spearheaded the proposal and consulted with Moody's Investors
Service in New York.
Lenders and investors fear that a bankruptcy judge might cancel any utility
contracts for solar, wind and other renewable power if the utilities file for
bankruptcy in the future. As a result, green power developers say it is
difficult to finance renewable energy projects.
When renewable developers encountered difficulties completing projects,
Nevada Power violated a state law requiring it to obtain increasing portions of
power from green sources. Interested parties are recommending the Public
Utilities Commission not fine Nevada Power for noncompliance this year.
Green power developers blamed the utilities' bad credit ratings in part for
their inability to finance power plants that would sell exclusively to the
utilities.
The two utilities have junk bond ratings because of financial problems
stemming from the Western energy crisis of 2000 and 2001. In addition, they are
appealing a $336 judgment awarded Enron Corp. over termination of power supply
contracts.
Guinn favors creation of the trust that would serve as a conduit for payments
for power purchased by Nevada Power and Sierra from renewable projects.
The trust would not guarantee that a bankruptcy judge would not terminate the
contracts but the trust would reduce the risk, lowering financing costs and
interest rates for renewable projects, Burdette said.
"The cost of money is very important to these projects, and this
generally will keep the cost of money down," Burdette said.
Nevada Power participated in the trust talks and is "committed to
furthering the development of renewables in the state," said spokeswoman
Sonya Headen.
"The efforts of the governor's energy office needs to be applauded and
supported," said Jon Wellinghoff, an energy lawyer with Beckley Singleton.
"It will, I think, be beneficial to everyone, including not only
renewable power developers that I represent, but also Nevada Power and the
people of the state," Wellinghoff said.
The program would help Ely Wind, a $50 million, 50-megawatt wind power
project planned north of the city of Elko, obtain loans and equity investments,
said Tim Carlson of Carlson & Associates. He hopes to start generating
electricity at the project by late 2006.
His company, Nevada Wind, owns the Ely project, and Carlson participated in
discussions on creation of the trust. Solargenix Energy, which is developing a
50-megawatt, solar thermal project in Eldorado Valley near Boulder City, also
was represented in talks on the trust.
Burdette said the trust mechanism also would help geothermal projects that
utilize hot underground water and renewable power plant proposals that the
utilities have yet to identify publicly.
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