ALJ/MFG/sid Mailed 10/25/2002

Decision 02-10-054 October 24, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of Sierra Pacific Power Company (U903 E) for an Accounting Order Authorizing the Establishment of a Regulatory Asset or Regulatory Liability Associated with the Implementation of Financial Accounting Standards Board Statement No. 133 and 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities.

Application 01-08-030 (Filed August 14, 2001)

OPINION ON ESTABLISHING

REGULATORY ASSETS OR LIABILITIES

ASSOCIATED WITH

FINANCIAL ACCOUNTING STANDARDS 133 AND 138

I. Summary

In this opinion, we grant the request of Sierra Pacific Power Company (Sierra) for authority to establish regulatory assets or liabilities associated with implementation of Financial Accounting Statements (FAS) 133 and 138.¹ FAS 133 and 138 relate to accounting for certain derivatives and hedging activities. Applicant's rates will not be adversely affected. While we grant Sierra's request, our action does not constitute approval of any contract, or the regulatory treatment of any contract.