Barrick, Sierra Pacific mull $5 million exit fee
April 19, 2004
The staff of the Nevada Public Utilities Commission has recommended that Barrick Goldstrike Mines Inc.
pay $5.13 million as the price for leaving the Sierra Pacific Power Co.
Toronto-based Barrick Goldstrike wants permission to build its own power plant to serve its Betze-Post and Meikle mines about 25 miles north of Carlin.
State law allows big power users those that need a megawatt or more to leave the grid of Sierra Pacific Power in northern Nevada or Nevada Power Co.
in the Las Vegas area.
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But the law requires that the big customers who leave compensate the remaining customers of the utility.
That’s how the PUC’s staff came up with its proposed $5.13 million exit fee.
The fee would be paid to Sierra Pacific Power, which would divide it between its investors and its ratepayers according to a plan established by regulators.
Representatives of Barrick Goldstrikes and Sierra Pacific Power both said last week they’re studying the recommendation, and neither was ready to say whether it thinks $5.13 million is the right number.
The PUC has scheduled a May 19 hearing on the proposed exit fee.
While several large power users casinos and a shopping mall have received permission to leave the Nevada Power Co.
grid in southern Nevada, the Barrick request is the first in northern Nevada.
The request also marks the first time that a big power user anywhere in the state has requested permission to build its own generating plant.
The companies that left the grid in southern Nevada decided to purchase power from an independent generating company.
The PUC’s staff noted that the law that allows big power customers to leave the traditional grid was intended to encourage construction of new generating plants in the state.
And that, the PUC said, means that the company’s proposal will create some benefits for Nevada to which it’s difficult to attach a price tag.
For instance, the company’s proposed plant would cost about $80 million to $100 million.
About 150 people would be employed during the construction.
Once construction is finished, the plant would employ about a dozen people earning about $50,000 a year.
It’s possible, the PUC staff said, that the state could reduce the exit fee levied against Barrick Goldstrike to reflect the economic effects of the construction.
Then, too, the PUC staff said it appears that the 115-megawatt plant proposed by Barrick Goldstrike might have some extra capacity.
That means that power could be sold to Sierra Pacific Power, especially during peak periods.
But the PUC staff was quick to note that Barrick currently doesn’t have a contract with Sierra Pacific Power to sell excess generation from the plant.
Barrick told the PUC it intends to use 14 Wartsila reciprocating engines operating on natural gas in the new plant.
Wartsila is a Finnish manufacturer of turnkey power plants.