<PAGE>
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO _______________
Commission File Number 0-508
SIERRA PACIFIC POWER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0044418
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 10100 (6100 Neil Road)
Reno, Nevada 89520-0400
(Address of principal executive office) (Zip Code)
(702) 689-5408
(Registrant's telephone number, including area code)
Indicate by check mark whether registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding at August 14, 1996
Common Stock, $3.75 par value 1,000 Shares
================================================================================
<PAGE>
SIERRA PACIFIC POWER COMPANY
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996
CONTENTS
<TABLE>
<CAPTION>
PART I - Financial Information
------------------------------ Page No.
--------
<S> <C>
ITEM 1. Financial Statements
Report of Independent Accountants........................... 2
Consolidated Balance Sheets - June 30, 1996 and
December 31, 1995................................... 3
Consolidated Statements of Income - Three and Six Months
Ended June 30, 1996 and 1995........................ 4
Consolidated Statements of Cash Flows - Six Month
Ended June 30, 1996 and 1995........................ 5
Notes to Consolidated Financial Statements.................. 6
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations............................................... 8
PART II - Other Information
- ---------------------------
ITEM 1. Legal Proceedings........................................... 15
ITEM 5. Other Information........................................... 15
ITEM 6. Exhibits and Reports on Form 8-K............................ 15
Signature Page........................................................ 16
</TABLE>
<PAGE>
[LETTERHEAD OF COOPERS & LYBRAND]
To the Board of Directors and Shareholder
of Sierra Pacific Power Company:
We have reviewed the condensed consolidated balance sheet of Sierra Pacific
Power Company and subsidiaries as of June 30, 1996 and the related condensed
consolidated statements of income for the three- and six-month periods ended
June 30, 1996 and 1995 and statements of cash flows for the six-month periods
ended June 30, 1996 and 1995. These financial statements are the responsibility
of management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet and statement of capitalization of
Sierra Pacific Power Company and subsidiaries as of December 31, 1995, and the
related consolidated statements of income, cash flows and shareholder's equity
for the year then ended (not presented herein); and in our report dated February
16, 1996 we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1995 is fairly
presented, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
/s/ Coopers & Lybrand L.L.P.
San Francisco, California
July 26, 1996
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland.
2
<PAGE>
SIERRA PACIFIC POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
------
Utility Plant at Original Cost:
Plant in service $1,844,568 $1,816,444
Less accumulated provision for depreciation 581,423 556,710
---------- ----------
1,263,145 1,259,734
Construction work in progress 206,158 153,067
---------- ----------
1,469,303 1,412,801
---------- ----------
Non-utility Investments 22,580 22,519
---------- ----------
Current Assets:
Cash and cash equivalents 1,299 1,373
Accounts receivable less provision for
uncollectible accounts: $1,629 at June 30,
1996 and $1,543 at December 31, 1995 73,582 91,262
Materials, supplies and fuel, at average cost 30,721 30,455
Other 4,748 2,346
---------- ----------
110,350 125,436
---------- ----------
Deferred Charges:
Regulatory tax asset 68,989 69,610
Other regulatory assets 70,095 82,841
Other 9,967 16,611
---------- ----------
149,051 169,062
---------- ----------
$1,751,284 $1,729,818
========== ==========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common shareholder's equity $ 583,244 $ 567,383
Preferred stock 73,115 73,115
Preferred stock subject to mandatory redemption - 13,600
Long-term debt 572,490 533,524
---------- ----------
1,228,849 1,187,622
---------- ----------
Current Liabilities:
Short-term borrowings 95,000 56,000
Current maturities of long-term debt
and preferred stock 418 7,208
Accounts payable 44,472 90,815
Accrued interest 4,461 5,300
Dividends declared 17,365 16,785
Accrued salaries and benefits 9,884 9,265
Other current liabilities 15,777 11,998
---------- ----------
187,377 197,371
---------- ----------
Deferred Credits:
Accumulated deferred federal income taxes 152,161 158,972
Accumulated deferred investment tax credit 42,812 43,797
Regulatory tax liability 44,148 45,084
Customer advances for construction 39,216 40,168
Other 56,721 56,804
---------- ----------
335,058 344,825
---------- ----------
$1,751,284 $1,729,818
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
SIERRA PACIFIC POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Operating Revenues:
Electric $124,601 $114,668 $252,358 $239,974
Gas 11,267 13,557 36,334 38,354
Water 11,508 10,557 20,838 19,734
-------- -------- -------- --------
147,376 138,782 309,530 298,062
======== ======== ======== ========
Operating Expenses:
Operation:
Purchased power 29,853 29,835 61,022 60,596
Fuel for power generation 24,539 21,175 48,402 40,460
Gas purchased for resale 5,091 5,942 18,045 21,491
Deferral of energy costs - net (2,306) 604 (1,690) 8,674
Other 35,176 28,536 64,647 56,166
Maintenance 4,610 4,224 9,087 7,928
Depreciation and amortization 14,288 13,710 28,350 27,305
Taxes:
Income taxes 8,408 7,780 20,702 17,203
Other than income 4,537 4,363 9,120 8,862
-------- -------- -------- --------
124,196 116,169 257,685 248,685
-------- -------- -------- --------
Operating Income 23,180 22,613 51,845 49,377
======== ======== ======== ========
Other Income:
Allowance for other funds
used during construction 1,357 261 2,020 449
Other income (expenses) - net 628 (102) 939 (349)
-------- -------- -------- --------
1,985 159 2,959 100
-------- -------- -------- --------
Total Income 25,165 22,772 54,804 49,477
======== ======== ======== ========
Interest Charges
Long-term debt 9,159 8,851 17,694 17,687
Other 1,262 859 2,398 1,884
Allowance for borrowed funds
used during construction
and capitalized interest (1,152) (517) (1,299) (934)
-------- -------- -------- --------
9,269 9,193 18,793 18,637
-------- -------- -------- --------
Income Before Preferred Dividends 15,896 13,579 36,011 30,840
Preferred Dividend Requirements 1,505 1,878 3,290 3,803
-------- -------- -------- --------
Income Applicable to
Common Stock $ 14,391 $ 11,701 $ 32,721 $ 27,037
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
SIERRA PACIFIC POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1996 1995
--------- ---------
(unaudited)
<S> <C> <C>
Cash Flows from Operating Activities:
- ------------------------------------
Income before preferred dividends $ 36,011 $ 30,840
Non-cash items included in income:
Depreciation and amortization 28,350 27,305
Deferred taxes and deferred investment tax credit (8,111) (3,286)
AFUDC and capitalized interest (3,319) (1,383)
Deferred energy costs (1,690) 8,674
Amortization of merger costs 5,375 2,000
Other non-cash 6,773 1,281
Changes in certain assets and liabilities:
Accounts receivable 17,680 13,817
Other current assets (2,668) (383)
Accounts payable (46,343) (18,019)
Other current liabilities 3,779 (4,043)
Other - net 6,065 (263)
-------- --------
Net Cash Flow from Operating Activities 41,902 56,540
-------- --------
Cash Flows Used in Investing Activities:
- ---------------------------------------
Additions to utility plant (89,470) (54,557)
Non-cash charges to utility plant 3,472 1,580
Net customer refunds and
Contributions in aid of construction 4,659 2,536
-------- --------
Net cash used for utility plant (81,339) (50,441)
Investment in subsidiaries and
other non-utility property, net 496 (2)
-------- --------
Net Cash Used in Investing Activities (80,843) (50,443)
-------- --------
Cash Flows from Financing Activities:
- ------------------------------------
Increase in short-term borrowings 39,862 5,457
Proceeds from issuance of long-term debt 30,020 -
Retirement of long-term debt (220) (205)
Reduction of preferred stock (20,400) (6,800)
Decrease in funds held in trust, net 9,175 9,235
Investment from the parent company 15,000 11,877
Expenses of external financing - (59)
Dividends paid (34,570) (29,850)
-------- --------
Net Cash as a Result of Financing Activities 38,867 (10,345)
-------- --------
Net Decrease in Cash and Cash Equivalents (74) (4,248)
Beginning Balance in Cash and Cash Equivalents 1,373 5,116
-------- --------
Ending Balance in Cash and Cash Equivalents $ 1,299 $ 868
======== ========
Supplemental Disclosures of Cash Flow Information:
- -------------------------------------------------
Cash Paid During Period For:
Interest $ 19,829 $19,302
Income Taxes $ 23,350 $27,154
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. MANAGEMENT'S STATEMENT
--------------------------------
In the opinion of Company management, the accompanying unaudited interim
consolidated financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows for the periods shown. It is
suggested that these consolidated financial statements be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's 1995 Annual Report on Form 10-K. Coopers & Lybrand L.L.P., the
Company's independent accountants, have performed a review of the unaudited
consolidated financial statements, and their report thereon has been included on
Page 2 of this report.
The results of operations for the three and six month periods ended June 30,
1996 are not necessarily indicative of the results to be expected for the full
year.
NOTE 2. IMPAIRMENT OF LONG-LIVED ASSETS
-----------------------------------------
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of", which is effective
for fiscal years beginning after December 31, 1995. The Company adopted the
standard January 1, 1996 and has determined that under current cost-based
regulation there exists no material impact on its financial statements as a
result of the adoption of the standard.
NOTE 3. PREFERRED STOCK
-------------------------
On June 3, 1996, the Company redeemed the remaining 408,000 shares of Series
G, 8.24% Preferred Stock, at par value, for $20.4 million.
On July 29, 1996, the Company through its consolidated wholly owned
subsidiary, Sierra Pacific Power Capital I (Trust), completed a public offering
of 1.94 million shares of 8.6% cumulative trust originated preferred securities
(TOPrS), with an aggregate liquidation value of $48.5 million. Concurrent with
the issuance of the TOPrS, the Trust issued to the Company 60,000 shares of
common securities with an aggregate liquidation value of $1.5 million. The only
assets of the Trust are the junior subordinated debentures issued by the Company
with a principal amount of $50 million, an interest rate of 8.6% and a maturity
date of 2036. The Company guarantee of the TOPrS, considered together with the
other obligations of the Company with respect to the Trust, constitutes a full
and unconditional guarantee by the Company of the Trust's obligations under the
TOPrS issued by the Trust. Net proceeds from the TOPrS offering and the
issuance of the common securities were used by the Trust to purchase the junior
subordinated debentures. Proceeds to the Company from the sale of the junior
subordinated debentures are being used to retire short-term indebtedness
incurred to redeem $20.4 million in principal amount of Series G, 8.24%
Preferred Stock and to reduce other short-term debt of the Company.
NOTE 4. DEFERRED ENERGY
-------------------------
In March 1995, the balances in the Company's (Nevada jurisdiction) deferred
energy receivables accounts were collected and, according to the provisions of
the stipulation approved by the Public Service Commission of Nevada in September
1994, SPPC suspended its deferred energy accounting, increased base rates by
$6.5 million, and decreased deferred fuel rates by $18.8 million.
Fluctuations in purchased gas, fuel and purchased power costs from the base
fuel rates will flow through to earnings until January 1, 1997. The Company and
regulators will re-evaluate the use of deferred energy accounting practices
prior to January 1, 1997.
In June 1996, the Company implemented the California Stipulation Agreement
which set the Energy Cost Adjustment Clause (ECAC), California Alternate Rates
for Energy (CARE) and Electric Revenue Adjustment Mechanism (ERAM) account
balances to zero, resulting in a reduction of deferred fuel costs of $2.3
million. The Stipulation also reduced rates by $2.3 million on an annual basis.
6
<PAGE>
NOTE 5. LONG-TERM DEBT
------------------------
On February 27, 1996, the Company registered for issuance of up to $80 million
of collateralized debt securities which may be offered from time to time.
During March 1996, the Company issued $20 million of medium-term notes under the
program. In April, 1996, the Company issued an additional $10 million in
medium-term notes. These are ten year non-callable notes, due in 2006, with
interest rates of 6.81% to 6.83%, payable in semi-annual payments. The proceeds
of the notes were used to reduce short term debt and to fund construction
projects.
On June 19, 1996, the Company converted the interest rate on the $80 million
Water Facilities Bonds maturing in 2020, to a daily rate from a flexible
(Commercial Paper) rate which reduces letter of credit, trustee fees, and
administrative costs.
In July 1996, the Company issued an additional $30 million principal amount of
its $80 million Medium-Term Note Program, Series C. These are three year non-
callable notes, due in 1999, with interest rates of 6.83% to 6.86%. The net
proceeds to the Company from the sale of the notes was used to reduce short-term
debt and to fund construction projects. To date, including this offering, an
aggregate of $60 million of medium-term notes, Series C, has been issued.
Note 6. MERGER TERMINATION
------------------------------
On June 28, 1996, Sierra Pacific Power Company and its parent Sierra Pacific
Resources received notice from The Washington Water Power Company of its
election to terminate the Agreement and Plan of Reorganization, as amended,
among Sierra Pacific Resources, Sierra Pacific Power Company, and The Washington
Water Power Company. As a result of the termination of the Merger Agreement,
Sierra Pacific Power Company will continue to operate as a separate utility and
a wholly-owned subsidiary of Sierra Pacific Resources. Sierra Pacific filed a
Report on Form 8-K on July 3, 1996, with the Securities Exchange Commission
which contains additional information regarding the termination of the Merger
Agreement.
As of June 30, 1996, the Company incurred $42 million in merger costs composed
of $13 million in transaction and transition costs and $29 million of early
retirement and severance program costs.
In accordance with the provisions of the merger stipulation with the Public
Service Commission of Nevada (PSCN), the Company had been amortizing all costs
over a five year period which began January 1, 1995. Through June 30, 1996, $17
million of total merger costs had been expensed. However, due to the
termination of the merger in June 1996, the Company reversed all previously
expensed amounts and applied different accounting treatment to the component
costs. All transition and transaction costs which the Company does not expect
to recover in future rates were expensed. The Company began to amortize early
retirement and severance costs over a ten year period beginning January 1, 1995
consistent with previous state orders on these types of programs. Accordingly,
$4 million was expensed in June 1996, which represented eighteen months of
amortization. The Company expects to recover the costs related to early
retirement and severance in future rates.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
Nevada, primary jurisdiction of SPPC, uses a marginal cost method for setting
rates by customer class. As a result of this methodology, changes in sales mix
(i.e., consumption by customer class) can result in increases or decreases in
revenues, irrespective of changes in total consumption.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ----------------------
1996 1995 1996 1995
--------- -------- ---------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Operating Revenues $147,376 $138,782 $ 309,530 $ 298,062
Energy Costs (57,177) (57,556) (125,779) (131,221)
-------- -------- --------- ---------
Revenue Margin $ 90,199 $ 81,226 $ 183,751 $ 166,841
======== ======== ========= =========
</TABLE>
Total operating revenues for the three-months ended June 30, 1996 increased by
6.2% over the comparable period of 1995 due to increased energy sales resulting
from overall customer growth and increased use per customer due to warmer
weather than last year. A record peak load of 1,162 MW was achieved in June.
Total operating revenues for the six-month period ended June 30, 1996 increased
by 3.8% over the comparable period of 1995, due to customer growth and warmer
weather partially offset by a decrease in electric rates in Nevada in May, 1995.
Energy costs are comprised of purchased power, fuel for power generation, gas
purchased for resale, and deferred energy. Average energy costs for the quarter
and the year to date are set forth below.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---- ---- ---- ----
Average cost per KWH of
purchased power 2.61cents 3.18cents 2.83cents 3.34cents
Average cost per KWH of
generated power 2.22cents 2.31cents 2.23cents 2.12cents
Average cost per therm of
gas purchased for resale 26.41cents 25.11cents 27.33cents 32.09cents
</TABLE>
While kilowatt-hours purchased increased by 20.6% and 18.6%, respectively, for
the three and six months ended June 30, 1996, over the comparable periods in
1995, the total cost of purchased power increased less than 1.0% for the six
months ended, due to the availability of low cost hydro-generated energy from
sources in the Pacific Northwest.
8
<PAGE>
Kilowatt-hours generated increased by 16.7% and 11.7%, respectively, for the
three and six months ended June 30, 1996, over the comparable periods in 1995
due to increased customer demand and overall customer growth. The total cost of
fuel for power generation increased by 15.9% and 19.6% for the three and six
months ended June 30, 1996 over the same period of 1995, reflecting higher fuel
prices and increased generation.
The total cost of gas purchased for resale decreased 14.3% and 16.0% for the
three and six months ended June 30, 1996 from the comparable periods in 1995,
due to a decrease in therm usage of 18.6% and 1.4% and due to lower prices for
natural gas in the first six months.
Deferred energy costs - net decreased by 482% and 119% for the three and six
months ended June 30, 1996 over the comparable period of 1995 due to the
suspension of deferred energy accounting in Nevada's electric and natural gas
jurisdictions in March, 1995. In June, 1996, the California Energy Cost
Adjustment Clause, California Alternate Rates for Energy, and Electric Revenue
Adjustment Mechanism rates were set to zero which resulted in a $2.3 million
decrease in these costs. For further discussion of deferred energy matters,
refer to "Note 4. DEFERRED ENERGY" on page 6.
Other operations expenses experienced a net increase of 23.3% and 15.1% during
the three and six months ended June 30, 1996 over the same period in 1995. The
increase was primarily due to a buy-out of one year of a coal contract, merger
related expenses, and a small increase in the reserve for injuries and damages.
For further discussion of merger costs, refer to "Note 6. MERGER TERMINATION" on
page 7.
In its 1995 Form 10-K, the Company stated that it would be investigating
alternatives to mitigate an inventory build-up of coal. As of June 30, 1996,
the coal inventory balance was approximately 407,361 tons, or roughly 71 days of
consumption at 100% capacity. The Company's policy has been to maintain an
average annual coal inventory sufficient to provide 40 days at full load.
However, with lower prices of natural gas and availability of inexpensive energy
from the Pacific Northwest, the coal inventory has grown. To mitigate further
inventory buildup, the Company paid $2.5 million to buy out one of its coal
contracts for approximately 315,000 tons which will satisfy the minimum
commitments of 300,000 tons for the period from July 1, 1996 to June 30, 1997.
Maintenance expense increased by 9.1% and 14.6%, respectively, during the
three and six months ended June 30, 1996 over the same periods in 1995 primarily
due to planned maintenance of the Company's Tracy generating plant, and
maintenance on distribution overhead lines.
Depreciation and amortization expense for the three and six months ended June
30, 1996 increased by 4.2% and 3.8% over the comparable periods of 1995, due to
continued increases in utility plant. Refer to the "CONSTRUCTION PROGRAM AND
REGULATORY PROCEEDINGS" section beginning on page 11 for additional discussion
of construction programs.
Income taxes increased for the three and six months ended June 30, 1996 over
the comparable period in 1995, due to higher operating income before taxes. The
decrease in the effective tax rate for the three-month period ended June 30,
1996 over the comparable period in 1995 was due to the tax effects of the
terminated merger. Income taxes reflected in operating income and other income-
net are summarized on the following page.
9
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30
------------------ ----------------
1996 1995 1996 1995
-------- ------- ------ ------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Currently payable $10,671 $ 9,109 $28,268 $20,158
Deferred taxes - net (2,103) (961) (7,126) (2,301)
Investment tax credit - net (492) (493) (985) (985)
------- ------- ------- -------
Total income taxes $ 8,076 $ 7,655 $20,157 $16,872
======= ======= ======= =======
Income taxes charge to:
Operations $ 8,408 $ 7,780 $20,702 $17,203
Other Income - net (332) (125) (545) (331)
------- ------- ------- -------
Total income tax expense $ 8,076 $ 7,655 $20,157 $16,872
======= ======= ======= =======
Income before income taxes
and preferred dividend
requirements $23,973 $21,234 $56,168 $47,712
======= ======= ======= =======
Effective tax rate 33.7% 36.1% 35.9% 35.4%
======= ======= ======= =======
</TABLE>
Allowance for funds used during construction (AFUDC) and capitalized interest
increased by 222.5% and 140.0% during the three and six months ended June 30,
1996 compared to the corresponding period in 1995, reflecting the current period
increase in construction work in progress (CWIP) and an AFUDC rate increase from
the prior year. Refer to the "CONSTRUCTION PROGRAM AND REGULATORY PROCEEDINGS"
section beginning on page 11 for additional discussion of construction programs.
Other interest on debt increased 46.9% and 27.3% for the three and six months
ended June 30, 1996, due to the Company carrying greater amounts of commercial
paper debt outstanding during 1996 which resulted in an increase in related
interest.
10
<PAGE>
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
- ----------------------------------------------------
During the first six months of 1996, the Company earned $36.0 million in
income before preferred dividends, and paid out $3.1 million in dividends to
holders of its preferred stock, and a $32 million common stock dividends to its
parent corporation, Sierra Pacific Resources. An additional investment of $15
million from the parent company accounts for a net increase in common
shareholder's equity of $15.9 million.
The Company issued $20 million principal amount in March and $10 million
principal amount in April of medium-term notes of its $80 million Medium-Term
Note Program, Series C.
On June 3, 1996, the Company redeemed the remaining 408,000 shares of Series
G, 8.24% Preferred Stock, at par value, for $20.4 million.
In July 1996, the Company issued an additional $30 million principal amount of
medium-term notes of its $80 million Medium-Term Note Program, Series C. To
date, an aggregate of $60 million of Medium-Term Note Program, Series C, has
been issued.
On July 29, 1996, Sierra Pacific Power Capital I, a wholly owned subsidiary of
the Company, issued 1.94 million shares of 8.6% Trust Originated Preferred
Securities with a total liquidation value of $48.5 million. For further
discussion of Trust Originated Preferred Securities, refer to "Note 5. LONG TERM
DEBT" ON PAGE 7.
CONSTRUCTION PROGRAM AND REGULATORY PROCEEDINGS
- -----------------------------------------------
The Company's construction program and capital requirements for the period
1996-2000 were originally discussed in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995. Estimated cash construction expenditures
for 1996 and 1997-2000 are $196.7 million and $494.8 million, respectively. As
of June 30, 1996, $81.3 million (41.3%) had been expended of the amount
projected for 1996. Of this amount, approximately 9.0% was provided by
internally-generated funds.
Alturas Intertie
- ----------------
This 345 kV line will originate at the Bonneville Power Administration
transmission line west of the northeastern California town of Alturas. It will
extend south some 165 miles to an existing Company substation in Reno. In
January 1996, the California Public Utilities Commission certified the final
Environmental Impact Report/Statement ("EIR/S") prepared for the project and
granted the Company a Certificate of Public Convenience and Necessity, which
recognizes the need for and benefit of the project.
In February 1996, the Bureau of Land Management ("BLM"), the Federal Lead
Agency, issued a positive Record of Decision for the project approving the
issuance of a right-of-way grant for approximately 70 miles of BLM land, and
confirming that the EIR/S for the project meets the requirements of the National
Environmental Protection Act. The Toiyabe National Forest issued a Record of
Decision for a "no-action" alternative for eight miles of Forest Service land in
Washoe County, Nevada. The Washington D.C. Office of the National Forest has
ordered this decision withdrawn. Sierra and the Toiyabe National Forest are
continuing to work toward a mutually agreeable solution for this project. On
April 30, 1996 the Company appeared before the Washoe County Commission and was
granted a Special Use Permit for the Alturas Project. The Company expects to
appear before the Regional Planning Commission in September, 1996.
The Public Service Commission of Nevada (PSCN) hearings were also held in
February 1996, as required under the Nevada Utility Environmental Protection Act
(UEPA). An additional permit to construct was issued by the PSCN on June 13,
1996. The permit is conditioned upon the Company obtaining permits from
entities such as the Forest Service, and the Regional Planning Commission. This
decision affirms the need for the line and grants conditional approval under
UEPA. Assuming all required
11
<PAGE>
permits are obtained, the Alturas line is expected to be operational by the
winter of 1997-98, and should provide greater system reliability and additional
supplies of electricity from hydroelectric power plants in the Pacific
Northwest. The current projected cost of the Alturas Intertie Project is $120
million of which $57 million has already been expended as of July 31, 1996.
Pinon Pine
- ----------
In August, 1992, the Company executed a cooperative agreement with the U.S.
Department of Energy ("DOE") for the construction of a coal-gasification power
plant. The project, known as the Pinon Pine power project ("Pinon") was
selected by the DOE for funding under the fourth round of the Federal Clean Coal
Technology Program. This clean coal integrated gasification combined-cycle
power plant will be fully capable of operating on coal, natural gas, and,
potentially, other fuels. The current rating is 106 megawatts. The DOE is
providing funding for approximately half of the construction cost and half of
the operating and fuel expenses for the first four years of operation.
Currently, the DOE has committed $154 million of funding for the project. The
DOE has authority under the Clear Coal Technology Program to fund up to $168
million. Any costs over $168 million are the responsibility of the Company.
The current construction cost of this project (including the DOE's portion) is
estimated to be approximately $220 million.
Construction began on the project in February, 1995, following resource plan
approval by the Public Service Commission of Nevada and the receipt of all
permits and other approvals. Engineering, procurement and construction
activities are underway, with the plant scheduled to be completed by year end
1996.
Pinon Pine Corporation and Pinon Pine Investment Company, subsidiaries of
SPPC, own 25% and 75%, respectively, of a 38% partnership interest in Pinon Pine
Company, LLC (The LLC), with GECC holding a 62% interest. The LLC was formed to
take advantage of federal income tax credits associated with the alternative
fuel (syngas) produced by the coal gasifier and available under Section 29 of
the Internal Revenue Code.
Recent Congressional legislation was passed extending by eighteen months the
required in-service date for alternative fuel (syngas) produced by the coal
gasifier to June 30, 1998 in order to be eligible for tax credits under Section
29 of the Internal Revenue Code and is awaiting Presidential approval.
Water Treatment Facilities Construction
- ---------------------------------------
The Safe Drinking Water Act (SDWA) amendments passed by Congress in 1986 have
significantly influenced the cost of the Company's treatment plant facilities.
The Company was officially notified in 1991 by the Nevada state health division
that, under the requirements of the surface water treatment rule (SWTR) of the
SDWA, filtration of water at its non-filtered plants would be required. The
Company submitted and received approval of a filtration compliance plan with the
Nevada State Health Division that provided for a three-year extension to June
1996.
In order to comply with SWTR filtration requirements and meet projected
capacity demands, the Company has completed construction of the second phase of
the Chalk Bluff treatment plant at a total cost of $88 million for the two
phases as of June 30, 1996. The first phase was completed in Spring of 1994
with a capacity of 27 million gallons per day (MGD) using high rate filtration
as approved by the Nevada State Health Devision in 1995. The second phase of
the facility was completed in May, 1996 providing a total production capacity of
69 MGD. Improvements to the Company's Glendale treatment plant were also
completed in June, 1996. Completion of these projects results in full
compliance with the SWTR requirements.
Hunter Creek, one of two chemical-process plants, was removed from operation
as a treatment facility in October 1995 and has been converted to a 30 million
gallon covered storage facility as of April, 1996. The other plant, Highland,
was removed from operation as a treatment facility in June, 1996, and will be
converted to a covered treated water storage facility by April, 1997. Combined,
Hunter Creek and Highland will provide 50 million gallons of treated water
storage for fire protection, operating storage, and emergency requirements.
12
<PAGE>
The Company uses groundwater from twenty-four supply wells. A manmade
contaminant tetrachloroethylene (PCE) has been found in five of these wells in
levels exceeding drinking water standards. Treatment equipment, costing $2.2
million, has been installed on two of the wells and they have been returned to
operation. The three other wells have been removed from operation until the
Company completes its investigation concerning the contamination. On March 29,
1996, the Company entered into a Bilateral Compliance Agreement with the Nevada
State Health Division which requires these wells to be in compliance with
drinking water standards by October, 1998. The Company will determine the
economic viability of treatment remediation as compared to other alternatives.
The Company continues its involvement in a cooperative remediation effort with
public officials to determine the source and extent of the contaminant and
develop a plan to abate on an area-wide basis. Washoe County has the ability to
create a special remediation district to help cover the cost of this effort.
The development of the remediation plan is projected to be completed in 1997.
State Regulatory Commissions
- ----------------------------
The Company's planned merger with The Washington Water Power resulted in SPPC
entering into stipulations with the California Public Utilities Commission in
June, 1996. Among other things, the Company agreed to reduce rates by $2.3
million annually by setting all balancing accounts rates to zero and to set all
balancing account balances to zero. Additionally, the Company was to file a
General Rate Case, including Performance Based Ratemaking Mechanism, within 60
days of the end of the month in which the merger was terminated. The rate
reduction and the setting of the balances to zero was implemented in June, 1996.
The Company has requested an extension to January 1, 1997 of filing requirements
resulting from the termination of the merger. Commission Staff has granted this
request.
Under terms of a 1994 stipulation approved by the Public Service Commission of
Nevada, the Company was to make Deferred Energy and Purchased Gas Adjustment
Clause filings no later than August 1, 1996 for rate adjustments effective
January 1, 1997. A one month extension to September 1, has been agreed to by
Nevada Staff. The January 1 date marks the end of a three year rate freeze
resulting from the above mentioned stipulation.
Federal Energy Regulatory Commission
- ------------------------------------
On April 24, 1996, the FERC issued its final rules concerning transmission
open access and stranded cost recovery. These were finalized in FERC Orders 888
and 889. The rules require that all public utilities that own and/or control
transmission facilities must file tariffs that allow third parties to utilize
the transmission facilities on a comparable basis to the use by the transmission
owners. The transmission provider must provide tariffs that allow third parties
to purchase point-to-point transmission service or service that has multiple
points or receipt and delivery, much the same as the provider, which is called
network service. The orders also require that the transmission provider
"unbundle" the transmission rates into a transmission only rate plus ancillary
services for generation and scheduling activities performed by the provider.
The purchase of the ancillary services by the customer from the transmission
provider is largely optional.
Another requirement of the FERC open access orders is for the utilities to
establish an electronic bulletin board (OASIS) which will facilitate the
purchase and sale of transmission service. This service must be operational by
the Fall of 1996. The rules also require a distinct separation of personnel who
act as wholesale marketers and as transmission marketers. The wholesale
marketers for the Company will no longer have exclusive access to information
related to the transmission system. The wholesale marketers will be required to
place service requests and purchases based on information provided on the OASIS
in the same manner as all other third parties.
The Order required utilities to file their initial tariffs for open access
transmission service by July 9, 1996. The Company filed on July 9, 1996, as
required. Final acceptance and approval of the filed rates are expected to
occur over the following year, with the resulting rates, terms and conditions
determined by the FERC for each utility. The impact of the new transmission
rate and the provision of expanded transmission service has not been fully
determined at this time.
13
<PAGE>
OTHER BUSINESS
- --------------
Merger
- ------
On June 27, 1994, the Company, SPR, The Washington Water Power Company (WWP),
and Altus Corporation ("Altus"), entered into an Agreement and Plan of Merger
and Reorganization ("Merger Agreement"), in which WWP, SPR and the Company would
be merged into Altus. Under the terms of the Merger Agreement, if the merger
was not consummated on or before June 27, 1996, any party, by providing written
notice to the other, could terminate the Merger Agreement provided that party
was not then in breach of any obligation under the Agreement which caused or
resulted in the failure of the Merger Agreement to be consummated by that date.
On June 28, 1996, WWP provided written notice to the Company and SPR that it
was terminating the Merger Agreement. Since that time, petitions to withdraw
merger applications have been filed by one or more parties in all jurisdictions
having approval jurisdiction over the merger.
Electric Business
- -----------------
In its 1995 Form 10-K, the Company discussed entering into long-term contracts
with its customers. Tailored contracts and agreements are being developed to
provide revenue guarantee (minimum annual bill) and termination charge security
for capital investments made on behalf of individual customers. Contract
provisions mitigate the risk of extending service to customers, primarily large
mining customers, and are designed to recover, over the life of the agreements,
customer-specific investments in facilities. Contract provisions for minimum
bills are based on customers attaining minimum annual demand and load factors.
Contract provisions for termination charges include recovery of all costs for
customer-specific facilities and, for the first five years under the contract,
recovery of up to two years of minimum bills. To date, the Company has
negotiated four such contracts, and the Public Service Commission of Nevada has
approved these contracts.
The Company is negotiating with existing mining customers to enter into long
term electric service contracts which would represent an estimated 309 MW under
contract with estimated average annual sales of 2,060,445 Mwh.
Water Business
- --------------
During 1995, comprehensive legislation was adopted by the Nevada Legislature
which provides for regional planning and cooperative management of all aspects
of water in the region. The Regional Water Planning Commission was created to
develop an integrated water plan. The Company and Washoe County signed an
agreement in July 1996 which provides methodology to determine retail service
area boundaries and establishes the Company as the wholesale purveyor to the
region. These cooperative efforts between the Company and local agencies will
help ensure regional planning and integrated water service. The agreement has
been sent to the Nevada Public Service Commission for approval.
14
<PAGE>
PART II
- -------
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed with this Form 10-Q are denoted with an asterisk (*). The
other listed exhibits have been filed with the Securities and Exchange
Commission during the period covered by this Report and are incorporated
herein by reference.
*(4) Form of Medium-Term Global Fixed-Rate Note, Series C (Exhibit
D to Form 8-K dated March 11, 1996).
*(12)(A) Schedule of Ratio of Earnings to Fixed Charges used in
connection with the issuance of Junior Subordinated Debentures
dated July 24, 1996 and incorporated by reference to current
report on Form 8-K dated August 2, 1996.
*(12)(B) Schedule of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends used in connection with the issuance of Junior
Subordinated Debentures dated July 24, 1996 and incorporated
by reference to current report on Form 8-K dated August 2,
1996.
*(15) Letter of independent accountants regarding interim financial
information of the Company.
*(27) The Financial Data Schedule containing summary financial
information extracted from the consolidated financial
statements filed on Form 10-Q for the six months period ended
June 30, 1996 for Sierra Pacific Power Company and is
qualified in its entirety by reference to such financial
statements.
(b) Reports on Form 8-K:
Current report on Form 8-K dated June 28, 1996 relating to the termination
of the merger agreement between Sierra Pacific Power Company, its parent
Sierra Pacific Resources, and The Washington Water Power.
Current report on Form 8-K dated August 2, 1996 relating to final forms of
exhibits to Sierra Pacific Power Capital I/the Company's Registration
Statement (No. 333-4032) in connection with its offering of $48.5 million
of Preferred Securities of Trust, guarantees of the Preferred Securities by
the Company and certain back-up undertakings, and the junior subordinated
debentures of the Company.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sierra Pacific Power Company
---------------------------------
(Registrant)
Date: August 14, 1996 By:/s/ Malyn K. Malquist
--------------- --------------------------
Malyn K. Malquist
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: August 14, 1996 By:/s/ Lynn M. Miller
--------------- --------------------------
Lynn M. Miller
Controller
(Principal Accounting Officer)
16
<PAGE>
EXHIBIT (12)(A)
Sierra Pacific Power Company
Ratio of Earnings to Fixed Charges
(Dollars in Thousands)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Twelve Months
Ended June 30,
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
- ---------
Income After Interest Charges $50,224 $49,843 $57,457 $60,863 $65,983 $71,153
Deferral Mechanism Adjustments (1,2) $0 $1,050 ($409) $2 ($552) ($493)
Adjusted Income ------- ------- ------- ------- ------- --------
Income Taxes, Operating $50,224 $50,893 $57,048 $60,865 $65,431 $70,660
Income Taxes, Non-Operating 24,810 26,029 27,499 29,113 37,370 40,869
Fixed Charges (1,2) (390) (787) 301 751 (231) (445)
46,095 41,975 43,823 43,493 40,326 40,677
------- ------- ------- ------- -------- ---------
Earnings Available
for Fixed Charges $120,739 $118,110 $128,671 $134,222 $142,896 $151,761
======== ======== ======== ======== ======== ========
FIXED CHARGES
- -------------
Interest on Long-Term Debt (1) $39,331 $37,184 $39,091 $35,193 $35,326 $35,334
Deferral Mechanism Adjustments $0 ($980) $459 $52 $554 $457
------- ------- ------- ------- -------- ---------
Adjusted Interest $39,331 $36,204 $39,550 $35,245 $35,880 $35,791
------- ------- ------- ------- ------- -------
Amortization of Debt Discount
and Expense, Less Premium 549 680 1,001 1,247 1,225 1,224
------- ------- ------- ------- ------- -------
Other Interest Expense (2) 3,482 2,528 822 4,588 556 1,071
Deferral Mechanism Adjustments 0 (70) (50) (54) (2) 36
------- ------- ------- ------- ------- -------
Adjusted Interest 3,482 2,458 772 4,534 554 1,107
------- ------- ------- ------- ------- -------
Interest Component
of all Rental Charges 2,733 2,633 2,500 2,467 2,667 2,555
------- ------- ------- ------- ------- -------
Total Fixed Charges $46,095 $41,975 $43,823 $43,493 $40,326 $40,677
======= ======= ======= ======= ======= =======
RATIO OF EARNINGS
TO FIXED CHARGES 2.62 2.81 2.94 3.09 3.54 3.73
======= ======= ======= ======= ======= =======
</TABLE>
(1) Adjusted for the deferral portion of the variable rate interest deferral
mechanism.
(2) Adjusted for the carrying charges on the variable rate interest deferral
mechanism.
17
<PAGE>
EXHIBIT (12)(B)
Sierra Pacific Power Company
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends
(Dollars in Thousands)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Twelve Months
Ended June 30,
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
- ---------
Income After Interest Charges $50,224 $49,843 $57,457 $60,863 $65,983 $71,153
Deferral Mechanism Adjustments (1,2) $0 $1,050 ($409) $2 ($552) ($493)
Adjusted Income ------- ------- ------- ------- -------- -------
Income Taxes, Operating $50,224 $50,893 $57,048 $60,865 $65,431 $70,660
Income Taxes, Non-Operating 24,810 26,029 27,499 29,113 37,370 40,869
Fixed Charges (1,2) (390) (787) 301 751 (231) (445)
46,095 41,975 43,823 43,493 40,326 40,677
------- ------- ------- ------- ------- --------
Earnings Available
for Fixed Charges $120,739 $118,110 $128,671 $134,222 $142,896 $151,761
======== ======== ======== ======== ======== ========
FIXED CHARGES/PREFERRED DIVIDENDS
- ---------------------------------
Interest on Long-Term Debt (1) $39,331 $37,184 $39,091 $35,193 $35,326 $35,334
Deferral Mechanism Adjustments $0 ($980) $459 $52 $554 $457
------- ------- ------- ------- ------- -------
Adjusted Interest $39,331 $36,204 $39,550 $35,245 $35,880 $35,791
------- ------- ------- ------- ------- -------
Amortization of Debt Discount
and Expense, Less Premium 549 680 1,001 1,247 1,225 1,224
------- ------- ------- ------- ------- -------
Other Interest Expense (2) 3,482 2,528 822 4,588 556 1,071
Deferral Mechanism Adjustments 0 (70) (50) (54) (2) 36
------- ------- ------- ------- ------- -------
Adjusted Interest 3,482 2,458 772 4,534 554 1,107
------- ------- ------- ------- ------- -------
Interest Component
of all Rental Charges 2,733 2,633 2,500 2,467 2,667 2,555
------- ------- ------- ------- ------- -------
Preferred Dividends (3) 6,481 8,496 12,258 11,827 11,525 10,757
------- ------- ------- ------- ------- -------
Total Fixed Charges/Preferred Dividends $52,576 $50,471 $56,081 $55,320 $51,851 $51,434
======= ======= ======= ======= ======= =======
RATIO OF EARNINGS
TO FIXED CHARGES/PREFERRED DIVIDENDS 2.30 2.34 2.29 2.43 2.76 2.95
======= ======= ======= ======= ======= =======
</TABLE>
(1) Adjusted for the deferral portion of the variable rate interest deferral
mechanism.
(2) Adjusted for the carrying charges on the variable rate interest deferral
mechanism.
(3) Preferred Stock Dividend Requirements (100% Tax Rate)
18
<PAGE>
EXHIBIT (15)
[LETTERHEAD COOPERS & LYBRAND]
August 14, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: SIERRA PACIFIC POWER COMPANY
REGISTRATION STATEMENTS ON FORM S-3 AND S-8
We are aware that our report dated July 26, 1996, on our review of the interim
financial information of Sierra Pacific Power Company for the period ended June
30, 1996, and included in the Company's quarterly report on Form 10-Q is
incorporated by reference in the registration statements on Form S-3 of Sierra
Pacific Resources for the Company's 2,000,000 shares of continuously offered
stock plan (File No. 33-90284) and the Common Stock Investment Plan (File No.
33-21365), in the registration statements on Form S-8 of Sierra Pacific
Resources for the Employees' Stock Purchase Plan and Employees' Stock Ownership
Plan (File No. 2-92454), Executive Long-term Incentive Plan (File No. 33-87646)
and the Non-Employee Director Stock Plan (File No. 33-48152), and in the
registration statement on Form S-3 of Sierra Pacific Power Company for Series C
Medium Term Notes (File No. 333-1374). Pursuant to Rule 436 (c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand international, a
limited liability association incorporated in Switzerland.
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FILED ON FORM 10-Q FOR THE SIX MONTHS PERIOD
ENDED JUNE 30, 1996 FOR SIERRA PACIFIC POWER COMPANY AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,469,303
<OTHER-PROPERTY-AND-INVEST> 22,580
<TOTAL-CURRENT-ASSETS> 110,350
<TOTAL-DEFERRED-CHARGES> 149,051
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,751,284
<COMMON> 4
<CAPITAL-SURPLUS-PAID-IN> 497,434
<RETAINED-EARNINGS> 85,806
<TOTAL-COMMON-STOCKHOLDERS-EQ> 583,244
0
73,115
<LONG-TERM-DEBT-NET> 572,490
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 95,000
<LONG-TERM-DEBT-CURRENT-PORT> 418
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 427,017
<TOT-CAPITALIZATION-AND-LIAB> 1,751,284
<GROSS-OPERATING-REVENUE> 309,530
<INCOME-TAX-EXPENSE> 20,702
<OTHER-OPERATING-EXPENSES> 236,983
<TOTAL-OPERATING-EXPENSES> 257,685
<OPERATING-INCOME-LOSS> 51,845
<OTHER-INCOME-NET> 2,959
<INCOME-BEFORE-INTEREST-EXPEN> 54,804
<TOTAL-INTEREST-EXPENSE> 18,793
<NET-INCOME> 36,011
3,290
<EARNINGS-AVAILABLE-FOR-COMM> 32,721
<COMMON-STOCK-DIVIDENDS> 32,000
<TOTAL-INTEREST-ON-BONDS> 3,323
<CASH-FLOW-OPERATIONS> 41,902
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>Sierra Pacific Power Company is a wholly owned subsidiary of Sierra Pacific
Resources and as such its common stock is not publicly traded. SPPC does not
report EPS information.
</FN>
</TABLE>
