Nevada Power Company Business Information, Profile, and History

History of Nevada Power Company

One of the fastest growing electric utilities in the United States, Nevada Power Company provided electric service to more than 400,000 residential, business, and industrial customers in southern Nevada during the mid-1990s, the most notable of which were the operators of Las Vegas's many hotels and gambling casinos and their fluorescent signs. Although the brightly lighted streets of Las Vegas's "Strip" represented the most noticeable example of the utility's electrical service, Nevada Power's service area was considerably larger than the greater Las Vegas metropolitan area, comprising more than 4,500 square miles in portions of Clark and Nye counties. Nevada Power used 11,000 miles of transmission and distribution lines to serve its customers. As an integral contributor to the growth of the communities it served, Nevada Power represented an indispensable source of electricity for much of Nevada, fueling the development of the state's various industries and enabling the creation of one of the world's most popular gambling destinations.

At the turn of the twentieth century, Las Vegas was little more than a way station along a railroad line, a sparsely populated community consisting of a collection of tents and shacks. Situated in the desert near the California border, the town was surrounded by a vast and largely uninhabited portion of the southwestern United States that promised to be one of the richest mining regions in the country. Encouraged by such prospects, miners, their families, and those wishing to participate in the growth of a boom town rushed to Las Vegas, creating fierce competition for the town's prime building and business lots. For much of the century, Las Vegas would be referred to as one of the fastest growing communities in the nation as it quickly emerged as a bustling center of trade and commerce from the dust of the Mojave Desert.

Fire proved to be an immediate problem in the rapidly growing town, whose residents lighted their homes and businesses with gasoline lamps, which posed considerable risk to the town's wood buildings and canvas-covered shacks. By 1906, shortly after the incorporation of the town, two fires had swept through the community, destroying nearly everything that had been constructed in the town's brief existence. The growing fear over fire led one local businessman, Charles P. Squires, to search for a solution, which he found in an idle direct current generator owned by a local company named Armour & Company. Power poles were constructed with wood from Squires' lumberyard, and copper wire was strung from the generator at Armour & Company into the center of Las Vegas, completing the initial transmission network of Las Vegas's new utility company, incorporated as Consolidated Power & Telephone Company on March 28, 1906.

Given the initial push by Squires and the financial support of a small group of other Las Vegas businessmen, Consolidated Power & Telephone began operating in the summer of 1906. From the outset, the company's two divisions, its electricity and telephone businesses, were essentially one, with the same management, workers, and equipment being used to serve the telephone and power needs of Las Vegas. These needs increased as the town's population grew, forcing the company to replace the Armour & Company generator with a more powerful, permanent generator.

This new generator, powered by a 90-horsepower, single-cylinder gasoline engine, became a fixture of Las Vegas life, reminding the town's residents of its existence every night. Referred to as "Old Betsy" by the local citizens, the engine was started every evening at dusk, emitting a coughing noise that, reportedly, could be heard a mile away all through the night. By 1912, however, the power supplied by Old Betsy was insufficient for the city's needs, and Consolidated Power & Telephone doubled its generating capacity with the addition of another engine, generator, and transformer. After six years of operation, Consolidated Power & Telephone had increased its generating capacity twice, a familiar theme throughout the utility's history and one that would be repeated as Las Vegas's only electric company continually struggled to keep pace with its community's electricity needs.

Two years after Consolidated Power & Telephone's generating capacity was doubled, the utility realized that it needed a larger power source and reached an agreement with Las Vegas's railroad shop (the San Pedro, Los Angeles, and Salt Lake Railroads had since arrived) to purchase all of the utility's electricity needs from the shop's power house. Using this source, the two business components of Consolidated Power & Telephone, still essentially operating as one, grew with the town, becoming larger as new arrivals poured into town.

In 1924, Consolidated Power & Telephone elected Edward W. Clark president of the company, five years before the beginning of the Great Depression and five years before Consolidated Power & Telephone was split in two. Clark had arrived in Las Vegas in 1905 and started a business called Clark Forwarding Company that, as its name suggested, carried supplies to distant mining camps. In his venture, Clark was successful, becoming a prominent figure in Las Vegas social circles and a well-respected businessman, who was selected as president of the city's First State Bank three years after being elected president of Consolidated Power & Telephone. Under Clark's stewardship, Consolidated Power & Telephone was divided into two companies, Southern Nevada Power Company and Southern Nevada Telephone Company, in 1929, and began operating as such on the first day of 1930. But, as the two divisions had done in the previous 23 years, the telephone and electricity operations continued to share personnel, facilities, and equipment, a practice that would continue for another 25 years.

Once Consolidated Power & Telephone was split in two, Clark became president of Southern Nevada Power, a company whose future energy requirements had been secured in a pivotal agreement negotiated by Clark. Clark was instrumental in adding the "Nevada Amendments" to the Swing-Johnson Act, which gave the state of Nevada the right to share in the water and power distributed by one of the largest construction projects in U.S. history, the Hoover Dam. Southern Nevada Power became the first utility to distribute electricity from Hoover Dam in 1937, when the dam was completed, and would use the hydroelectric power generated from the dam to supply all of Las Vegas's electricity needs for roughly the next 20 years. In the interim, during the early and mid-1930s before power from the dam was available, Southern Nevada Power expanded its transmission system by constructing a 69-kilovolt line to accommodate the voltage coming from Hoover Dam, establishing a reliable transmission network for what was believed at the time to be a permanent source of power.

With the formidable force of the Hoover Dam behind it, Las Vegas increasingly became an all-electric city during the late 1930s, when many residences and businesses replaced their coal and kerosene-fired stoves with electric heating units. As the city was effecting this transition, the Second World War broke out, bringing with it a significant boost to the population of the region surrounding Las Vegas. Nellis Air Force Base, the largest air training base in U.S. history, was established outside of Las Vegas, substantially increasing the area's electricity needs and providing additional clientele for a number of new businesses that opened during the war years. One notable addition to the city's business community was the El Rancho Vegas, which opened in 1940 and sparked the construction of similar, luxury hotels that catered to the area's military personnel and to tourists, drawn to the region's major attraction, the Hoover Dam. Adding to this rush of activity were two other key contributors to the region's growth: the relocation of many workers from the Hoover Dam project, referred to as "Boulder Dam Holdovers," into Las Vegas and a steadily growing electro-chemical industry near Henderson, Nevada, which combined with the establishment of Nellis Air Force Base, created a much greater need for electricity and strengthened Southern Nevada Power's position considerably.

The greatest boost to Las Vegas's growth, however, was yet to come, occurring after the war in 1946, when Bugsy Siegel opened the Flamingo hotel and casino and launched Las Vegas's gaming industry. Similar resort hotels and casinos were soon to follow, increasing the pace of the city's growth dramatically. By 1952, Southern Nevada Power's management realized the company's allocation of power from the Hoover Dam could no longer satisfy the electricity needs of its service area, so the company decided to construct a steam generating plant of its own.

This became the first unit of the utility's Clark Station, named after Edward W. Clark, who had negotiated the rights to Hoover Dam's power and in whose memory the utility now shifted away from Hoover Dam's power. The first unit was put into operation in 1955, but before it was completed, construction of a second unit was begun, which began operating in 1957. Before the decade was through, as Las Vegas underwent a transition from being a hydroelectric-powered city to a steam-generated-powered city, construction of a third unit was begun, which was in service by 1961. For the decade, Southern Nevada Power recorded prodigious growth, benefitting from the population increases of the 1940s and the popularity of Las Vegas as a gambling destination in the 1950s. The utility entered the decade with 12,360 customers and exited it with 35,000, a rate of increase that was eclipsed by its annual revenue totals, which soared from $1.8 million in 1950 to $9.2 million in 1959.

In 1961, Southern Nevada Power substantially increased its service area by merging with Elko-Lamoille Power Company, a northern Nevada utility company. The absorption of Elko-Lamoille's territory extended Southern Nevada Power's presence into Elko County, home to many of the state's largest livestock ranches, and led to a name change in June that year, when Southern Nevada Power Company became Nevada Power Company in recognition of its broader scope of operation.

Throughout the 1960s, the utility's growth was accelerated by its further involvement in the Atomic Energy Commission's research and production activities in Nevada, which began in 1956 when a 64-mile-long transmission line was constructed to serve nuclear test sites at Mercury and Indian Springs Air Force Base. Nevada Power provided the electricity for the Commission's nuclear testing and development of propulsion systems for space exploration.

Against this backdrop, Nevada Power began construction of the Reid Gardner Station in 1963, named for the president of the utility who died that year after nine years of guiding the company. Opened in 1965, the Reid Gardner Station represented a significant change in direction for Nevada Power, and, as it turned out, a prophetic one as well that helped the utility withstand the pernicious years that loomed ahead. Instead of oil, the Reid Gardner Station utilized coal as its fuel, coal supplied from underground mines in southern Utah. When the first unit of the station was completed in 1965, Nevada Power became the first utility in the state to operate a coal-burning generating station, a distinction that benefitted the company enormously when an energy crisis gripped the nation in the early and mid-1970s. Before the oil embargo that sparked the energy crisis occurred, however, Nevada Power strengthened its dependence on coal by adding a second unit to the Reid Gardner Station in 1968, then beginning construction of a third unit in the early 1970s while oil prices soared.

Bolstered by its early development of coal-burning generating stations, Nevada Power was able to mitigate the debilitative effects of the energy crisis at a time when the neon lights describing Las Vegas's gambling district were dimmed voluntarily for a five month period. The 1970s included other challenges for Nevada Power, as rising inflation and growing public opposition to rate increases inhibited the utility's growth after two decades of robust expansion. Despite the harsh economic times, Nevada Power was ranked as one of the fastest growing utilities in the country during the 1970s, growth that was partly attributable to the utility's early reliance on coal as an energy source for its generating stations. While other utility companies invested considerable sums in converting generating facilities to coal, Nevada Power was well on its way, obtaining, by the end of the decade, roughly 70 percent of its fuel requirements from coal, 27 percent from natural gas, four percent from hydroelectric power, and relatively little from oil.

Entering the 1980s, Nevada Power's area of service was focused largely in southern Nevada, its territory in Elko County having been exchanged for the service responsibilities for Henderson, Nevada, in a deal with California-Pacific Utilities in 1977. Henderson, situated in the region that had prospered from a rapidly growing electro-chemical industry during the 1950s, experienced a substantial surge in population during the 1980s, increasing nearly threefold, a growth trend imitated by other communities in Nevada Power's service area during the 1980s. This was true of Las Vegas's population during the decade, which nearly doubled. But equally as important, the city's popularity as a gambling and recreation destination for tourists grew, fueling the demand for more and more hotels to accommodate the continuous stream of people entering the city. As it had for much of the century, the growth of Las Vegas translated into growth for Nevada Power, which by mid-1980s collected roughly $360 million a year in revenues.

When it entered the 1990s, Nevada Power served approximately 350,000 customers, possessing slightly more than $1 billion in assets. These figures would climb, as would annual revenues, which amounted to $422 million in 1990 largely because of the continued population and construction growth in Las Vegas. In 1992, the U.S. Census Bureau reported that Las Vegas was the fastest growing metropolitan area in the country, which was encouraging news for Nevada Power's leadership, struggling to post higher revenues yet keep electricity rates low in an increasingly competitive business environment.

In 1993, Nevada Power recorded $651.7 million in electric sales, $326 million of which was derived from the utility's commercial and industrial customers, while $267 million was collected from its residential customers. Three major hotel facilities were opened that year, the MGM Grand Hotel, the Luxor, and the Treasure Island, creating an additional need of 65 megawatts of electricity to light the hotels' 10,000 rooms, an amount of electricity nearly equal to the generating capacity of the utility's Clark Station during the late 1950s. As Nevada Power charted its future in the mid-1990s, the addition of similarly enormous hotels, with their vast electricity needs, seemed to guarantee that the primary power for the bright lights of Las Vegas would continue to be supplied by Nevada Power Company well into its second century of business.

Principal Subsidiaries: Nevada Electric Investment Co.; Commsite Inc.