The company is charged with providing one of the state's most vital needs: Electricity. Without a stable power supply, Nevada's economy would be crippled, not to mention the discomfort that would come from not having air conditioning on a hot summer day.

Yackira took the reins of Sierra Pacific Resources last spring as the utility moved toward bringing energy independence to Nevada.

The company owns several natural gas power plants in the state and is investing in renewable energy plants, including solar and wind projects.

Sierra Pacific Resources has come under fire from powerful political leaders and environmental groups over a proposed coal-fired power plant it plans to build in White Pine County. Yackira said the plant is necessary to support the massive growth expected in Southern Nevada in the next five years and to supplant older, less environmentally sensitive coal plants.

Question: How much of Nevada's electricity is purchased on the open market?

Answer: Well, it depends. I can give you some statistics. In 2005 it was about equal between Sierra Pacific and Nevada Power. And I'm going back to that time because in 2006 we had some significant additions to our ownership of power plants in Southern Nevada. In 2005 about 40 percent of our power in Southern Nevada and about 45 percent of our power in Northern Nevada were generated by our own generating plants. So we purchased the corollary of that: 60 (percent) to 65 percent of our power. That changed in 2006 when we added about two times the amount of owned capacity in Southern Nevada. So as of April 2006 we owned twice as much generated capacity in Nevada power as we did at the beginning of 2006. That's the completion of construction of two power plants plus the acquisition of most of another power plant. So in 2006 we produced about the reverse of that, we produced about 60 percent of the power needs for Southern Nevada and purchased 40 (percent). In 2007, when we've had a full year of those power plants being on, we'll have produced about 75 percent of our power. So as we continue to build power plants, we need less from the market and that's good for our customers. In Northern Nevada we're just completing a major plant — in the spring of 2008. That will mark for the first time ... being virtually self-sufficient in ownership of generation versus power needs. So in 2008 (and) 2009 we will be purchasing very little on the open market in Northern Nevada.

Obviously buying power on the open market can lead to price fluctuations. But what kind of problems can a lack of energy independence lead to?

I'd say it's two things. One is the assurance of reliability. In other words, the assurance that the lights will come on when you come in your house and that the air conditioning is running when you need it and the casinos are operating — making sure that you have at least sufficient power to meet your base load need, meaning the 24/7 needs that our customers have. That kind of assurance — the reliability — is part of the puzzle.

But you mentioned the other and that is an assurance of price. Now there is never an assurance when it comes to fuel prices when you're using natural gas as the primary fuel. In that it's a price that fluctuates a lot. So as the price goes up and goes down, we have no control over that. It's a national commodity, but our customers are hurt when the price goes up. So having more control over power plants assures that reliability is kept and that in times of tight capacity, we're not paying more for power than we would if we had to buy on the open market. However, when you're building natural gas plants, counting on natural gas as a major commodity, you'll have more price fluctuations. And that's the reason we're interested in building the coal plant, to have more stability in price and more predictability in price, and our customers will be happier.

Five or six years ago, Sierra Pacific Resources faced a financial crisis because of the power crunch in the West. The company has since overcome those fiscal troubles. How was that done, and how strong is the company today?

The state of the company is certainly far stronger than it was five years ago. We have restored credit quality of the company so our utilities' credit — when we go to market and have to raise debt — the cost of that interest is lower as a result of the financial strengthening of the company. And we've been able to restore our dividend. We were one of three electric companies in the United States that was not paying a dividend. And while I like the fact that our company can differentiate itself as to the growth aspect of it, I didn't like that we were differentiating ourselves from other electric companies by not having a dividend paid. We restored the dividend — announced that in late July. It was a very important step for our company.

How was it done? Very, very strong teamwork, a great group of people who all have the same idea in mind. And that was we needed to improve what we did so our Public Utilities Commission could see that we took the issues that we had earlier in this decade very seriously. We had to improve what the investor thought of our company and of our state, quite frankly. We had to improve what our customers thought of our company and we had to improve what our employees thought of our company because there were a lot of issues with respect to the company's being in financial crisis as you can imagine: How long is the company going to stay alive? Is this a place I should continue to be employed? And all those issues were dealt with by this team that my predecessor put together — built around working out of the financial issues and relationship problems that we had. So I just feel very fortunate to have been here at this time working on these issues with a great group of people.

Let's go back to Southern Nevada's energy needs. How much power does this part of the state use and how does that break down among residential, commercial and government users?

Let me see if I can give you a good snapshot and I'll give you numbers just for perspective. When we judge what our growth is, it's really based on two things: One is how much energy is consumed in the full year by our customers. And second, what is the peak demand that we have to meet in order to assure that everything is working in the middle of the summer time?

Our peak demand is close to 6,000 megawatts. This past year we surpassed 5,800 megawatts. We surpassed the 2006 peak by approximately 250 megawatts. So if you're thinking about it in terms of growth, 250 megawatts on top of about 5,000 megawatts would be about 5 percent. That's a little bit less than 5 percent. That's tremendous growth. The industry is growing at about 1 percent. So it is a lot and having that in the forefront of our minds and making sure we're building power plants in Nevada for Nevadans to meet their load is very important. So the amount of energy that is consumed is about 20 million kilowatt hours a year. That, in and of itself, is not huge in comparison to other electric companies throughout the United States. But again, looking at the growth, the growth in energy use is about 5 percent a year. So the most important thing we have to work on is assuring all our customers are hooked up when they want to be hooked up with the growth that we have and assuring reliability in our state.

The largest segment we serve is the residential customer and that's close to 50 percent of our total energy needs. The largest business segment we serve is the gaming industry, the resort industry, and that's about 20 percent. So the remainder, or about another 30 percent, is small businesses — commercial — so it's a pretty balanced mix. In most states in the United States it's about 50 percent residential, some states are higher, some states are lower, this one's about 50 percent. But the major industry that we serve is the gaming industry at about 20 percent.

Given that growth, why is conservation in your company's best interest and how have your conservation programs been received by the public?

I think very well. I think our conservation programs are extremely well received for a variety of reasons. One is that they're good for the environment. People understand that the cleanest kilowatt is the one that is not produced. So it's good for the environment to have conservation programs, it's good for our customers in that they see the immediate response that these programs have on their bills. We come into their houses, we do an energy audit and we say if you do these five things, you'll reduce you consumption by X percent and we'll give you rebates for doing most of those things that you want to accomplish to reduce your consumption. They see it on their bill. So it's good for our customers, and it brings down their cost of energy. And it's good for us in that we connect with our customers. Our customers see that we want to help them in reducing their consumption so it has a lot of positive attributes. We can afford to do it, mainly because we have the incredible growth that we do here. I don't think there are a lot of states — take a state like Michigan, which has declining population — it would be very difficult for the electric company there to strongly promote conservation without hurting its bottom line. We really won't hurt our bottom line much by exploring conservation in a more robust fashion. And also the Public Utilities Commission here has a mechanism by which we treat the investment as if we were investing in the power plant, so our investors aren't hurt by it either. So everybody ends up winning. The customers win with lower bills, the environment wins because there's less pollution in the air, our investors win because it's an investment they can earn money on.

Let's talk a little bit about the coal-fired power plants. As you know, it's a controversial topic in this state right now. Tell me why those projects are needed, where that energy is going and why it has to happen now.

We have 70 percent dependence on natural gas to produce electricity. It's too much for us to count on that preponderance of a fuel in our portfolio of energy needs. We're the only state in the West that has that kind of disproportionate share of natural gas as a fuel. Take California, for example: 50 percent of its energy comes from a combination of hydro, coal and nuclear. We won't get there with those. Hydro — a lot of people think Hoover Dam produces much of our energy. The fact of the matter is that at best it produces 3 percent of our peak energy and that's when Lake Mead is full. So it produces very, very little of our energy needs.

We need to have a more balanced mix. And I guess it's like saying if you have an investment portfolio, I don't think any investment provider would suggest that you put 70 percent of your investment into one stock. It produces too much volatility, there's too much risk. And that's really what we've been seeing for the past 10 years. The industry itself has dedicated virtually all of its construction since the 1990s to natural gas plants — highly efficient plants, there's no doubt about that. But whenever you put all your eggs in one basket it produces volatility and fluctuations with price that the customer doesn't want and rightly so. So we need to have more of a balance.

Why coal? Coal has the ability to go out for contract for longer periods of time. You can contract for coal for 10 or 20 years so it gives more stability in price. It's the most abundant resource we have in the United States. If we want to be energy independent in the United States ... you can't do it without coal. And I would like to test the carbon capture and storage techniques that are being discussed throughout the United States in this national debate about global warming. At our Ely Energy Center we'll get the focus on Nevada to be the energy technology leader along with our development of renewable energy. So I think it has all of the attributes.

There's one other thing: By building this coal plant, which will use all the best technology available today, we'll not only have the cleanest coal plant in the United States, but we'll be able to shut down coal plants that were built 40 years ago that don't have the ability to reduce the emissions that this one would. So it has all the attributes that most of the environmental community — if they were to look at the numbers — would see that we would be reducing our carbon footprint by building the Ely Energy Center.

Senate Majority Leader Harry Reid has vowed to stop the construction of any coal-fired power plants in Nevada, including the Ely Energy Center. Has his opposition hindered the development of coal-fired plants in Nevada?

I don't believe so. I think the natural tendency when you're as short on power as we are — meaning the state — and the company had really not been in the mode of building generating capacity for about 25 years — and we changed that starting in 2003 when we embarked on a new strategy to build new power plants in Nevada for Nevadans — we have a need for power. We don't own enough generation in order to be self-sufficient, especially in Southern Nevada, so we need a power plant. I think that because of our need for that, if we could waive a magic wand and have the Ely Energy Center constructed overnight, that would be better for our customers than delaying the power plant or having it delayed. We had an aggressive schedule. We wanted to get this power plant on as soon as we possibly could. Our schedule called for completion in late 2011, early 2012. That schedule simply can't be met and as a result of that we are going to build a natural gas plant first and the Ely Energy Center will come on later. But the need for that power hasn't changed and our desire to build the coal plants hasn't changed.

Some environmentalists have said that no matter how clean burning these coal plants are, they're not as clean as a solar array or a wind farm or a geothermal plant. Why don't you explain for us why you can't use those technologies for the base load.

Let me first say that we're very proud in this state, and should be, for the development of renewable resources. Nevada is No. 1 in the United States in terms of geothermal energy per capita and within about a week, after the Nellis Air Force Base completes the largest photovoltaic — which is the conversion of sun light directly into electricity — when it completes its plant we will be the largest in terms of solar capacity per capita in the United States. So we've done an excellent job, but there's a lot more to do.

We have the blessing of geothermal capacity and geothermal is a base load capacity. In other words, you don't require the sun to be shining or the wind to be blowing in order to produce energy. It produces energy from steam coming out of the ground, captured and running a steam turbine. So it looks like other forms of what I would call traditional power plants: natural gas and coal plants and nuclear plants and other forms of base load capacity.

But base load capacity means it's available at all times, 24 hours a day, whenever you need it at the push of a button. And solar ... when it's dark it's obviously not producing. On a cloudy day it's not producing much energy. So you can't count on it for base load capacity.

The same is true for wind energy. When the wind is not blowing sufficiently — and it has to be blowing at about nine miles per hour in order for a wind turbine to produce enough physical turning of the turbine to produce electricity — when it's not at that level, which is most of time during the year — even though we think we have a lot of wind — it won't produce any energy. So it is wonderful, it is a wonderful form of energy production when it's available. But when it's not available I'm sure you would like to make sure that your lights stay on and your air conditioner stays on.

So it needs to be, just like I was saying before about a balanced portfolio, renewable resources need to be part of that balanced portfolio. To our Legislature's credit, that is 20 percent of our portfolio by 2015. One of the most progressive renewable energy standards in the United States and one that I believe can be met, unlike some others which I believe might be pipe dreams — so I think we are very fortunate to have the renewable energy in this state — but it's insufficient to produce enough energy.

There's another thing: Geothermal energy is priced about the same as a traditional power plant and it produces power like a traditional power plant. So the more geothermal we can have, the better off we'll be. Solar power right now is about four times the cost of a traditional power plant. Wind power right now is about 130 to 150 percent of what a traditional power plant can produce energy for. So what I would love to see happen is more investment coming into the state to test new technologies to bring that price ... down, especially for solar. And I think that can be done.

Again, make Nevada a focal point for energy technology development, whether it be clean coal technology, renewable energy. Why not make Nevada that central point in the United States for those new developments?

Your company recently announced a partnership in building a huge wind energy plant, the China Mountain Wind Farm, on the border with Idaho. How is this project different than other wind farms in nearby states and what will it do for Nevada?

A lot of those are older technologies. They're smaller, they were built during a time when contracts for those types of power plants in California were extremely lucrative. And they also had aspects of them that paid to have them up as quickly as possible and the time frame for the most lucrative part was very, very short. So it's different than having an investment that is a far longer term. But those plants were built in the 1980s, 1990s. The technology has changed dramatically. The company that I came from, FPL Energy ... is today the largest developer of wind projects in the United States. It was part of the renewable energy movement and working with manufacturers completely changed the way wind turbines were made. It was what I was saying before, by investing in technology, you improve technology and lower the costs. That's certainly true with wind power in the 1990s and the early part of this decade as well. The new megaprojects — hundred, two-hundred megawatt projects — use very large turbines, 300 feet plus. The wingspans of these blades are enormous, and they capture a lot more of the energy. It uses computers to move the blades to capture energy as Doppler information is coming, so it's producing as much energy as possible — efficiently as possible. And it doesn't have a tendency to kill as many bats and birds, which was a problem environmentalists had with the older technologies. So it's a fascinating thing to see, especially as it's going up.

Will the delay on the Ely Energy Center along with the vital north/south transmission line affect that project?

We need more transmission in order to bring wind to fruition because wind in this state is most plentiful in areas where transmission doesn't currently exist. So we certainly need more transmission not just in the form of the north-south (line), but also structures from major trunk lines of transmission to where those power plants would be located in order to ensure that we capture the maximum amount of energy available in this state.

We need to build that transmission line. We need to build it for three reasons. One is to ensure that the renewable energy that is in this state stays in the state because if it is not developed in this state and you need the transmission line in order to take advantage of it in this state, it's going to go elsewhere — to California or elsewhere. Wouldn't it be a shame to see those plentiful renewable resources go to a different place?

Second, it allows us to move the power from the Ely Energy Center both north and south so that we can share those resources. But we can also share other resources between Sierra Pacific Power and Nevada Power by connecting the two systems so that we can build fewer power plants to ensure reliability. Since Sierra has a larger peak demand in the wintertime than we do, we can use the power plants we have in Northern Nevada more efficiently — we can use them more often — and that will reduce the cost for our customers as well. So it really has tremendous attributes that support the need for that transmission line.