Nevada Utilities Help “Win the West”

(This overview is the first in a series of articles about Nevada's major utilities, which helped open the Silver State to westward expansion. On September 22, 2008, Sierra Pacific Power Company and Nevada Power Company announced they would “do business” under the corporate name, NV Energy. For historical references, the two companies are addressed here as they were originally.)

Just as highballing locomotives and the telegraph key helped open America to westward expansion in the 1800s, electric, gas, and water utilities further defined and refined the process. Try to imagine Las Vegas, the “most exciting city in the world,” without electricity. Absent electric power, Northern Nevada's high desert country would still be a collection of sleepy little hamlets. Many cities and towns across the territory never would have been established, and the fabulous gold and silver resources of the Comstock could not have been mined efficiently had it not been for Nevada's utilities.

Together, let's go on a brief journey through the Silver State's rich and colorful history as viewed through the prism of the utilities that served and helped forge it. Here, and in stories to come, we'll visit Nevada, the nation's fastest growing state—one carved out by lonely prospectors, ranchers, emigrant sheepherders, utility engineers, and early visionaries. They were not afraid to dream or dare.

Las Vegas: A Tent Settlement

In 1905, Las Vegas was a dusty little village of tents and shacks boasting two banks, a post office, two hotels, stores, saloons, and, even then, gambling houses. Early Las Vegas was faced with a formidable challenge: fire. The gasoline lamps that provided precious illumination at night posed a constant hazard to the settlement's canvas shacks and wooden frame buildings.

Fortunately, the timing was right: Armour & Company had constructed a large ice plant to provide refrigeration for its products destined for California. As a backup energy source, Armour engineers installed a generator for which the company had no immediate use. A Las Vegas visionary, Charles P. Squires, convinced Armour to sell electric current from the generator to the Consolidated Power and Telephone Company, which supplied energy to the city at the time.

So popular was the new service, the Las Vegas Times reported: “Radiant, brilliant and successful was the turning on Monday evening of the juice that electrically lighted Las Vegas…a marvelous new city, marvelous for being only a little more than six months old…” Demand quickly outpaced supply and the public complained about its inability to access the power.

Introducing “Old Betsy”

In order to meet demand, Consolidated Power and Telephone bought a ninety-horsepower gasoline engine sporting a pair of massive flywheels more than six feet in diameter. Every evening after sunset, when it was time to turn on the lights, the engine kicked in with an air-shattering “poof-poof-poof” that could be heard throughout the settlement. Locals quaintly christened it “Old Betsy.”

In 1929, the company split into two separate entities—Southern Nevada Power Company and Southern Nevada Telephone Company—though they shared personnel, facilities, and equipment for years to come.

The Hoover Impact

In 1937, Nevada began to benefit from inexpensive water and power produced by Hoover Dam, which was to satisfy the needs of the region for the next two decades. World War II and the completion of the dam brought dramatic change and greater power demand to Las Vegas. Some entrepreneurs envisioned the dam as a major tourist attraction and built the first of the plush resort-casinos for which Las Vegas later would become legendary.

That growth required Southern Nevada Power Company to construct its first steam electric generating plant in 1952, and to purchase power from outside the state. A new generating station near East Las Vegas went operational in 1956. Generation and substation capacities were increased as the city's population exploded entering the “soaring sixties.”

Nevada Power Company is Born

On June 1, 1961, Southern Nevada Power Company became Nevada Power Company and was the first Nevada-based corporation to be listed on the New York Stock Exchange. The ensuing decades witnessed record growth in the company's service area as the lure of the Sun Belt drew new residents, tourists, industries, and conventions to Las Vegas. That growth was followed by Nevada Power Company's response, which will be detailed in a later episode.

In the 1970s, the company met more challenges imposed by soaring fuel costs, accelerated inflation, expensive and highly competitive money markets, and growing public opposition to rate increases. Nevada Power introduced new programs to answer those challenges and responded with more generating facilities.

Anatomy of a Company

Given their relative sizes and economic impacts today, it may surprise some that Reno and its surrounding settlements actually preceded Las Vegas in their development, thanks to more than eighty utility companies that eventually merged to become Sierra Pacific Power Company.

The earliest of these was the Eldorado Canal Company, established in 1852 to provide ditches for hydraulic mining during the rush for gold in California. Mining, the very heritage of the Old West, also turned out to be a windfall for the company and the region.

That proved particularly true when the legendary Comstock silver lode was discovered in 1859 in Virginia City, southeast of present-day Reno. During its peak years, Virginia City was known as one of America's most exciting cities.

Over the next several years, a number of other utility companies—electric, gas, and water—merged to form the Truckee River General Electric Company in 1899. It would meet the need for inexpensive electricity to serve the Comstock Lode and prove to be another step on the way to establishing Sierra Pacific Power.

The search to provide a cheaper energy alternative for gold and silver operations continued as miners dug ever deeper into the earth and began experiencing severe problems. The answer was found thirty-three miles away on Reno's Truckee River.

The Truckee River General Electric Company constructed a hydroelectric plant on the river capable of generating 2,000 horsepower for the mining companies. Reno, a small town with a few farms and merchants perched along the Southern Pacific Railroad—and other settlements—also would benefit. Overnight, the power on the Comstock dropped from thirty-four dollars per horsepower per month to seven dollars. By 1911, three more small hydroelectric plants were completed along the river.

Introducing Sierra Pacific Power Company

More consolidations took place in the 1900s in Northern Nevada and northeastern California. By 1923, the Truckee River General Electric Company completed its acquisitions and changed its name to the Truckee River Power Company. In 1928, it became Sierra Pacific Power Company.

From then, through the 1950s, the region saw unparalleled growth as many discovered Northern Nevada's moderate climate; absence of income, sales, or inheritance taxes; and very liberal corporation laws. In response, Sierra Pacific continued its own pattern of steady growth, adding new transmission and substation facilities.

But, by 1960, it became obvious that the company had to build its own sources of power, and its first steam generating units went into operation in the 1960s and ‘70s—all gas- and oil-fired—which were the most abundant and least expensive energy sources at the time. More generating plants followed as gold mining boomed again in Northern Nevada in the 1980s. At the same time, gaming and tourism grew steadily, further increasing the demand for power.

Based on its early history of merges and acquisitions, Sierra Pacific Power also evolved as the purveyor of natural gas and water for its service territory, making it one of the nation's few triple-utility companies. In addition, the company pursued alternate energy sources, including such renewables as geothermal, solar, and hydroelectric, in an effort to provide clean and affordable power to its customers.

The year 1984 was a watershed for Sierra Pacific Power, as the company restructured its corporate organization by establishing Sierra Pacific Resources, a holding company “prepared to respond to the challenges of diversification.” Sierra Pacific Power became a subsidiary of the holding company, as did six other entities with significantly different businesses already in the mix.

Announcing a “Merger of Equals”

In 1998, Sierra Pacific Resources and Nevada Power Company announced plans for a “merger of equals.” The new company would adopt the Sierra Pacific Resources name and create a “premier distribution and energy services company in the Western U.S.” All regulating bodies approved the merger of equals in 1999.

At the time, the new company served more than 800,000 electric customers; 100,000 gas and 65,000 water customers in Nevada; and the Lake Tahoe area of California.

The section on the history of power in Nevada was sponsored through a grant from Nevada Energy.