71180--3/1/2007--NEVADA_POWER

related topics

{debt, indebtedness, cash}

{financial, litigation, operation}

{cost, regulation, environmental}

{capital, credit, financial}

The Utilities are subject to numerous environmental laws and regulations that may increase our cost of operations, impact or limit our business plans, or expose us to environmental liabilities. The Utilities may not be able to mitigate fuel and wholesale electricity pricing risks which could result in unanticipated liabilities and cash flow requirements or increased volatility in our earnings. If NPC and/or SPPC do not receive favorable rulings in the deferred energy applications that they file with the PUCN and they are unable to recover their deferred purchased power, natural gas and fuel costs, they will experience an adverse impact on cash flow and earnings. Any significant disallowance of deferred energy charges in the future could materially adversely affect their cash flow, financial condition and liquidity. If NPC and/or SPPC do not receive favorable rulings in their future general rate cases, it will have a significant adverse effect on our financial condition, cash flows and future results of operations. Past regulatory decisions significantly adversely affected our liquidity. Adverse regulatory decisions could cause downgrades of our credit ratings which, in turn, could limit our access to the capital markets and make it difficult for the Utilities to obtain power necessary for their operations. If SPR is precluded from receiving dividends from the Utilities, its financial condition and ability to meet its debt service obligations will be materially adversely affected. SPR s indebtedness is effectively subordinated to the liabilities of its subsidiaries, particularly NPC and SPPC. SPR and the Utilities have the ability to issue a significant amount of additional indebtedness under the terms of their various financing agreements.

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71180--3/1/2007--NEVADA_POWER_CO