The ratings on Sierra Pacific Resources (SPR) are based on its consolidated credit profile with subsidiaries Nevada Power Co. (NPC) and Sierra Pacific Power Co. (SPPC). The credit profile reflects a stable regulatory relationship with the Public Utilities Commission of Nevada (PUCN); adequate hedging of market exposures, offset by higher debt levels; lower cash flows; a very high exposure to natural gas prices; and service area volatility. NPC and SPPC provide electricity in southern Nevada and northern and western, central, and northeastern Nevada, respectively, including the cities of Reno and Carson City and the Lake Tahoe area in California. SPPC also provides natural gas service around Reno. Historically, NPC and SPPC represent about 73% and 27%, respectively, of consolidated cash
