Testimony suggests VEA in clear over Creech contract

Valley Electric Association might be on a roll.

According to testimony posted on the Nevada Public Utilities Commission website Monday, a PUC staff member investigating a complaint brought by NV Energy against the cooperative says commissioners should side with VEA over the state’s largest electricity provider.

NV Energy brought a complaint in January alleging VEA broke state law when it entered into a 50-year contract last year with the federal Defense Logistics Agency-Energy to maintain and operate an electrical distribution system at Creech Air Force Base, 63 Alpha/Silver Flag and Point Bravo, the latter presumably being training facilities on the base.

NV Energy complained that not only did the cooperative violate the law by jumping its service territory, its expansion into NV Energy’s service area meant VEA should now be subject to the same PUC regulations the private utility is subjected to.

NV Energy is already suspected of being responsible for AB391, a bill that narrowly passed the legislature but was vetoed by Gov. Brian Sandoval last month. That legislation would have forced VEA to conform to more stringent regulation by the PUC. Rural cooperatives in Nevada are not regulated in the same way for-profit, private utilities are. Cooperatives answer to their members and an elected board of directors.

VEA officials testified against AB391, suggesting that being subject to PUC oversight would have added new costs to operations and possibly forced the cooperative to raise rates by as much as 7.5 percent.

Now it appears VEA, in its David versus Goliath fight with NV Energy, is headed toward a victory once again.

Adam E. Danise, an electrical engineer for the PUC, submitted testimony Monday that he finds no evidence VEA broke any laws or did anything to subject itself to new oversight as a result of its agreement with the Department of Defense logistics agency.

In a series of findings, Danise disputes all of NV Energy’s charges, stating that VEA is not assuming ownership of distribution facilities owned by the DoD at Angel Peak on Mt. Charleston as alleged, that VEA is not “reselling energy” it gets from NV Energy as alleged, that VEA is not providing electric service to the DoD as alleged, and finally that VEA is not extending its system into NV Energy’s service area as NV Energy asserted it was.

PUC officials gave VEA, NV Energy and its own staff members as well as outside commenters, until Monday to weigh in on the complaint, originally filed Jan. 18.

VEA officials have maintained all along that the cooperative simply engaged in a contract with the Department of Defense just as other third-party contractors have done in the past, despite NV Energy being the electric provider of record for that area.

On June 25, however, the PUC declined to dismiss NV Energy’s complaint even though its own staff recommended as much.

“Many facts were missing from the initial Complaint that Staff subsequently obtained through discovery and which Staff used to support its recommendation that the Commission grant the Motion to Dismiss. Unfortunately, during the discovery process DLA Energy (Defense Logistics) refused to provide the same information to NPC (NV Energy) as it did to Staff ... It appears to the Commission that this gamesmanship by DLA Energy has prevented NPC from being able to verify these facts,” according to the PUC’s order denying VEA’s motion to dismiss the complaint.

Curt Ledford, VEA’s in-house general counsel, told the co-op’s board of directors at a meeting a few weeks ago that he was not surprised by the PUC’s decision.

“A motion to dismiss is scrutinized such that the tribunal goes through all the facts in evidence against the moving party. In this case it was Valley Electric. So every fact in play, every fact in question is construed against us in this case. And so, the answer to your question is yes, because usually there is a question of fact that needs to be further analyzed to make a determination. Generally, you can’t summarily dismiss something because all of the facts aren’t in evidence.

“Most motions to dismiss are denied,” he said.

VEA CEO Tom Husted, at the same meeting, said he almost welcomed the additional scrutiny, mostly because it will settle the matter and set a precedent.

“We applaud them for their actions in moving forward in ensuring they have all the information. What they stated was that they needed more information and so they are moving forward with an investigation and they are doing their job, which is what they are supposed to do. At the end of the day, we believe that the facts of the law will prevail. As they go through their investigation, they will make that determination,” he said.

A full hearing on the matter of the PUC has not yet been scheduled.

VEA members can view the testimony from all parties involved by going to puc.nv.gov. Click on dockets, then go to all dockets and in the “search dockets” space type in 13-01021. Filings are organized latest to earliest by date and name of filer. Some information has been redacted from the filings for reasons of business confidentiality.