News

Wellinghoff to step down

Federal Energy Regulatory Commission chair Jon Wellinghoff of Nevada has sent his resignation to President Obama.

Wellinghoff, who previously held the post of Nevada consumer advocate (the advocate represents consumers at utility rate hearings), has been a member of FERC since 2006 and chaired it since 2009.

Under Wellinghoff, FERC has become known for aggressive pursuit of fraud and market manipulation, to the point that business reporter Chris Newkumet once asked him, “What’s gotten into you?” Wellinghoff responded that in the post-ENRON era, the agency had been given new powers and funding by Congress, and penalties had been made more credible: “Back in the Enron era we had 10 or 12 attorneys working in a small enforcement office with, really, no authority, no WELLINGHOFF penalty authority, and now we have over 140 attorneys headed by a former U.S. Attorney. … Those who do play by the rules know that they can make money in the markets and not be disadvantaged and not be taken advantage of, just like consumers, by those people who are not playing by the rules. So it is important that you have somebody in place who can ensure that those rules are enforced, and enforced in a fair and full manner.”

Wellinghoff will serve until his replacement takes office.

Refund may be coming

The Nevada Public Utilities Commission is considering ordering refunds to customers because NV Energy made more money than allowed under rate regulation.

The utility received $10 million for lost sales compensation, money authorized by the state to compensate the utility for money it loses from energy conservation measures. But the law also says that compensation can’t go higher than the amount the utility is authorized to collect as rates.

Any refunds won’t come right away. The Nevada Bureau of Consumer Protection filed a petition seeking the refunds on June 17. The utility will reply by July 31 and a hearing with both sides will be held by a hearing officer on Aug. 7. The hearing officer will then make a recommendation to the full PUC.

Green groups: Lake threatened

Environmental groups say Senate Bill 229, passed by the just-ended Nevada Legislature, is a threat to Lake Tahoe. The bill canceled a threatened pullout of Nevada from the bi-state Tahoe Regional Planning Agency but also imposes conditions on California that critics say would torpedo environmental protections for the lake.

“The new law still presents California the choice of either ending the Compact or ‘saving’ a much weakened version that places development on a par with environmental protection of the Lake,” said Sierra Club official David von Seggern.

Two chapters of the Sierra Club, Friends of the West Shore and Earthjustice are critical of the new legislation.

The new Nevada law, which was approved by the governor, threatens to switch back to a pullout if California fails to embrace a new regional plan for Lake Tahoe and unless the bistate compact that created TRPA is amended to amending the Compact to require consideration of economic factors in land-use planning.

—Dennis Myers

Back in business

But don’t get too excited

As January 10 turned to January 11 in 2009, more than 200 workers at the by Silver Club in Sparks were out of Dennis Myers work. When the casino shut down at midnight, workers gathered in a bar with a stage and partied (see photo, facing page). The Dan Bauer Band kept playing for them. It was a melancholy event. The Silver Club had held out for more than two years into the recession, but finally gave up the ghost, a significant setback for downtown Sparks.

“That’ll probably bring more people to downtown Sparks.”

Phil Bryan Former casino manager

For four and a half years, the building has sat there dark, the kind of thing that any city’s leaders hate to see in the downtown. So the news that an Elko-based company would reopen the Silver Club building as the Bourbon Street Casino [parent company: Northern Star Casinos] was an enormous relief to them. City officials quickly licensed it with a list of conditions, and the corporation said it was aiming for an August 1 opening. Last week, several job fairs were held at which a hundred prospective workers signed on.

Across the street from the reopened casino, of course, is the Nugget, which has had its own troubles—reduced workforce, cuts in employee perquisites—but has stayed in business. Some Nugget workers have expressed apprehension about what the new competition will mean.

Retired casino executive Phil Bryan, who has managed casinos in both northern and southern Nevada and in Colorado, said the new club may be competition for the Nugget, but that doesn’t mean it will necessarily hurt the Nugget. In fact, it may well help.

“I think that’ll provide more of what one great casino operator I knew used to call ‘Building the bonfire.’ And the idea is that if you create a hub of business, that attracts more people because they have more alternatives to see,” Bryan said. “That’s a sort of an old, old school of thought, but I think it’s still an effective idea. We’ve seen that happen in downtown Las Vegas recently. They started offering more attractions, another came in and bought a couple of places. … My opinion is that it’ll probably bring more people to downtown Sparks. It’ll start to build interest in downtown Sparks.”

He said the reopening of the Silver Club property will also make special events in the downtown better. Sparks has a lot of special events, like the Nugget Chili Cook-Off, weekly farmers’ markets during summer, a holiday parade in winter.

“Well, having more commercial places to go to should help [special events],” Bryan said.

Moreover, the former Silver Club Hotel is not reopening along with the casino, so the Nugget could well benefit from housing some Bourbon Street customers.

Workers have been putting the former Silver  Club building in shape inside and out. For four  years, the casino and an adjoining hotel have  been used mostly for fire and police training  exercises.

The flip side

But it’s possible to read too much into developments like this, which happen all the time. A casino reopening or a month’s improvement in sales or gambling taxes are often treated as significant.

Nevada casinos are “not doing very well at all,” said economist Thomas Cargill. “Northern Nevada is not doing well. Las Vegas is a unique place, but it’s still struggling.”

Cargill said an additional casino in downtown Sparks is fine as far as it goes.

“Sparks has done a very nice job of building a visitor-friendly atmosphere,” he said, and every bit helps.

But he also said some clubs have been reopened for a reason that does not speak well of the health of the economy—their value fell so far that they could be opened again for a song. That doesn’t indicate a robust recovery.

“The value of these properties, commercial properties, has fallen so far that it makes sense to invest in them because you’re not investing much,” he said. “You buy the property cheap right now and the wages are low and you might be able to establish a market.”

He pointed to the purchase of the Reno Siena hotel casino for $3.9 million in November 2010.

“That’s chump change,” he said.

Nevada is recovering

Photo/Dennis Myers

After midnight on January 11, 2009, minutes after losing their jobs, Silver Club workers danced on the top of a bar in the club.

economically, he said, but still has major and momentous problems.

“The discouraged worker effect is very large,” he said. “It’s up somewhere around 14 percent.”

Discouraged workers are those who have looked for work for a long time, finally giving up hope. And once they exhaust their jobless benefits, government stops counting them as a part of the unemployment rate.

“People are working 30 hours when they want to work 40, working two part-time jobs when they want one full-time job,” Cargill said. “There’s still a lot wrong with the state’s economy. … It’s ‘recovery,’ but I would put quotes around it.”

He expects it to take four or five years for the national recovery to bring unemployment down to a normal rate, and even longer in Nevada—“probably longer because Nevada is the nation’s basket case for real estate. A tremendous amount of wealth was destroyed.”

Gambling and construction

were, until the recession, the engines on which Nevada has thrived since the end of the Second World War.

“Yes, there are signs of recovery, but recovery is moving out of a trough,” he said of Nevada’s problems. “We are still a long way away from being a functioning economy. Anybody who thinks housing is going to recover soon is going to be wildly disappointed.” Ω

“It’s‘recovery,’butIwould putquotesaroundit.”

Thomas Cargill economist

Memorial

Before the start of the funeral for former U.S. Rep. Barbara Vucanovich (portrait in background), her daughter Patty Cafferata greeted Gov. Brian Sandoval (right) and former U.S. Sen. John Ensign. A reported 400 people attended the event at St. Rose of Lima Church.