Sin City Needs To Wet Its Whistle
by Graham Summers
September 18, 2006
Las Vegas is getting dry.
All that gambling, boozing and lechery can really work up a thirst. And Sin City’s primary source of water, the Colorado River, is drying up from droughts.
Vegas is going to have to come up with some agua fast. And Vegas officials are searching out alternate sources of water in the state.
Earlier this month, a hearing began for a $2 billion plan to transport some 33 billion gallons of water from aquifers located in east central Nevada.
On one side is the Southern Nevada Water Authority (SNWA), a group of officials in charge of making sure that Vegas keeps a rocking and reality doesn’t come a knocking.
On the other side of the dispute are the rangers, farmers, and wildlife officials who don’t want their environment turned into a dustbowl in the name of debauchery.
Comparisons have been made to the Los Angeles Purchase, a scam in the early 20 th century in which Sierra Nevada fueled its growth in a massive water purchase that left the Owens Valley a virtual wasteland.
One thing’s for sure, if the SNWA’s plan goes through, there’s going to be a ton of money flowing in the water sector in East Nevada. We’ve got a couple of weeks of hearings to go, but should SNWA win, there’s going to a few very sizable contracts going to water infrastructure and transportation companies.
In the meantime, take a look at Sierra Pacific Resources (SRP).
SRP owns 75% of the Silverhawk Power Station, a water-cooled power plant that supplies the Las Vegas Valley. It bought the interest in the plant from Pinnacle West Capital for $208 million in early 2006.
And guess who owns the other 25% of Silverhawk?
The SNWA.
The SNWA uses Silverhawk’s energy to power its water treatment facilities and pumping water to Vegas. Should the SNWA’s $2 billion water plan go through, you better believe SNWA is going to be demanding a whole lot more power from Silverhawk.
I’m looking into who the likely candidates are for SNWA’s potential future water transportation and infrastructure needs. I’ll let you know as soon as I find anything.
Good trading,
Graham
