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Proposed power rate hikes would zap business profits
 
By Phoebe Sweet / Staff Writer

Chris Winter stocks yogurt in the dairy case Tuesday at Whole Foods in Henderson. Whole Foods makes regular repairs to coolers to ensure they run at peak efficiency, cutting down on rising costs.
Photo by Sam Morris

Although residential electric customers are likely to be hardest hit if proposed June 1 rate increases are approved, business owners in the valley are dreading the increase, too.

The average year-round, residential bill for a single-family home will increase 13 percent, up $19 to $155 if rate increases are approved next week. Summer bills for that same home will increase to $243, up from $215.

But Michael Yackira, president and chief operating officer for Nevada Power Co. parent Sierra Pacific Resources, said there is no average business customer. Businesses in the valley ranges from small stores and shops to mega- resorts on the Strip.

The average overall increase for all customers if the rate increases are approved next week will be 9 percent.

After residential customers, small businesses would be hit hardest. Rates for gasoline stations or other small businesses will increase 10.08 percent.

Regular casinos would see a 6.81 percent increase, while megaresorts would see a 6.24 percent increase.

The different percentage increases across rate classes "account for cost differentials in serving different classes of customers," said Yackira, who will take over as Sierra Pacific chief executive later this summer. "Large business customers, such as major gaming institutions on the Strip, they're using power more frequently than anyone else and therefore they're getting a volume discount."

Cara Roberts, spokeswoman for the Las Vegas Chamber of Commerce, said whenever the cost of doing business goes up it affects small businesses disproportionately.

"Small businesses always have a harder time absorbing higher costs, particularly if they are unanticipated," Roberts said.

Yackira also said residential and small-business customers used the most energy when prices are highest - during the summer months - while larger business uses energy more evenly throughout the year, which accounts for the difference between residential and business-class rates.

But Paul Stowell, vice president of public and shareholder relations for Business Bank of Nevada, which was recently acquired by California-based City National Bank, said larger businesses are just as concerned about rate increases.

"We're as concerned as the next business," Stowell said. "I think everybody gets concerned when, whether it be electric or the price of gas or inflation in general, (prices) become a concern."

Stowell said new Business Bank branches and offices are built to conserve as much energy as possible, and employees are encouraged to be mindful of saving electricity. The company has invested in power savings copiers and other machines that shut down when not in use.

Stowell said the bank looks ahead and plans for future energy increase, like the ones that will begin June 1.

"As a prudent business owner, you've got to look at those things and project out," he said.

Roberts, of the chamber of commerce, said smart businesses should plan ahead for cost increases.

"It's easier to adapt if a business budgets for it at the beginning of the year," she said.

And Yackira said Nevada Power has programs to help business customers conserve energy and save money, especially during the summer.

The utility offers incentives through the Sure Bet Program for business to buy energy efficient lighting and air conditioning and other conservation measures.

"The amount that can be saved is quite dramatic," Yackira said.

Roberts said business should take that advice and use common-sense methods to save on electric bills, such as keeping air conditioning at 78 or 80 degrees, shutting off of lights and equipment at night and using blinds to block sunlight.

Maria Maguci, marketing supervisor for the Whole Foods grocery store in The District in Henderson, said her company also makes regular repairs and maintenance on coolers and other machinery to be sure they're running at peak efficiency. Whole Foods also closely regulates the temperature in its stores.

The company is also considering a proposal to place solar panels on its roof as well as other energy-generation measures as a result of increasing energy costs.

"Like most people, in the summer time our power bill is almost doubled. In winter it goes back down," Maguci said, adding that the company budgets ahead for potential increases.

And although it doesn't offset the cost of electricity, which Whole Foods purchases from Nevada Power, the company offsets the carbon its energy purchases put into the atmosphere by purchasing renewable energy credits from a wind farm in Colorado. Whole Foods purchases more than 500,000 megawatt hours of renewable energy credits each year.

The 9 percent overall rate increase both business and residential customers will see on their July Nevada Power bills is based on several rate increases and one small rate decrease scheduled to take effect June 1.

The Public Utilities Commission is expected to rule next week on a request by Nevada Power and parent company Sierra Pacific Resources to increase its general rates.

State Consumer Advocate Erik Witkoski said he has recommended a $40 million, 2 percent generate rate increase. Nevada Power has asked for a $155 million, 7.5 percent increase.

They PUC should also rule next week how much Nevada Power can recuperate from last year's fuel and energy purchases over the next 14 months.

And rate increases to recover $85 million in litigation costs stemming from the Western Energy Crisis and $190 million in previously disallowed costs have already been approved by settlements.

Phoebe Sweet covers banking and marketing for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at (702)259-8832 or by e-mail at phoebe.sweet@lasvegassun.com.

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