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VEA may face large fines over NNSS work

Valley Electric Association was ordered to appear at a show cause hearing by the Public Utilities Commission on why the cooperative shouldn’t be fined up to $63,000 for starting construction on the Nevada National Security Site innovation project before the PUC granted final approval.

The hearing is scheduled for March 6.

VEA filed a petition with the PUC requesting permission to build additional reliability interconnections on July 12 at the Mercury Switching Center as part of a five-year, $61.6 million contract for the NNSS or an order finding the connection didn’t require PUC approval. On Sept. 12, the PUC set the case for hearings, as VEA and NV Energy disagreed on whether the innovation project was an extension of facilities that required PUC approval under a 1963 agreement.

But VEA already started work on the project Sept. 17, moving ground and installing steel poles. VEA crews began pulling wire Oct. 9 and finished installing wire and fiber optics Oct. 25.

On Nov. 26, VEA, NV Energy and the PUC staff, collectively, filed a stipulation that the innovation project constituted an extension of facilities within the NNSS under the 1963 agreement between the utility companies that required PUC approval. The parties stipulated the PUC should use a public interest standard to determine whether to approve the project, both parties stipulated the innovation project would be in the public interest.

The 1963 agreement between the utility companies — formerly Nevada Power Company and VEA’s predecessor the Amargosa Valley Cooperative Inc. — states neither of the parties will extend facilities within the Nevada Test Site, the previous name for the NNSS, without advising the other party in writing and securing PUC approval.

Under an order dated Jan. 31, the PUC said: “The 1964 order and the 1963 agreement explicitly require that before an extension of facilities within the NNSS, the commission must approve the proposed extension. However VEA started construction on the innovation project on Sept. 17, 2013, less than a week after the commission took the matter under advisement and set it for further proceedings. The commission did not approve the innovation project until Dec. 20, 2013. VEA began construction on the innovation project 63 days before the commission approved the project.”

Under state law, VEA could be fined in an amount not to exceed $1,000 per day for each day of the violation and not to exceed $100,000 for any related series of violations. A fine of $1,000 per day would amount to $63,000.

In a statement, VEA said the transmission line was constructed but not energized because VEA was waiting for PUC approval. Now that approval has been granted, VEA is working toward energizing the line.

VEA noted the cooperative voluntarily filed a petition with the PUCN seeking the commission’s approval for construction of the line, or in the alternative, a declaratory order finding that the additional interconnection does not require commission approval. The co-op said that while a 1992 PUC docket requires either VEA or NV Energy to seek approval from the commission before extending facilities into the NNSS, it was unclear whether VEA’s Innovation Project qualified as an extension of its lines.

“In 2013 alone, VEA spent thousands of dollars defending itself in regulatory matters that were brought about by NV Energy, prior to the company’s merger with MidAmerican Energy Holdings Company. We anticipated additional pressure from NV Energy when constructing this line, which is why we worked tirelessly to move the process along,” the cooperative said. NV Energy had filed a protest of the Valley Electric contract to service Creech Air Force Base and claimed VEA needed to pay an exit fee to them before taking over the NNSS contract. Both petitions were dismissed by the PUC.

“VEA’s mission is to serve the best interest of our members. We will never apologize for maintaining this steadfast commitment to our members and working toward improving reliability,” cooperative officials said in a prepared statement. “Furthermore, we believe that we have acted in the best interest of our members here, and will continue to do so, in accordance with the law. It is important to note that VEA’s relationship with NV Energy has improved significantly as a result of NV Energy’s recent merger with MidAmerican Energy Holdings Company. VEA anticipates that this relationship will continue to improve.”