May 16--The top 22 revenue generating Strip casinos could each see a $3.2 million decline in cash flow this year because of rising electricity and natural gas prices in Las Vegas, according to a newly released report from the Wall Street investment banking firm of Bear, Stearns & Co. 

Such locally based giants as Mandalay Resort Group, MGM Mirage and Station Casinos could take the greatest hit because of their moneymaking dependence on Nevada hotel-casinos. 

Geographically diversified companies, including Harrah's Entertainment and Park Place Entertainment will likely fare better, as electricity rates for the typical Las Vegas business are expected to rise 39 percent this year, according to the report by financial analysts Jason Ader, Marc Falcone and Eric Hausler. 

"While this is nothing to sneeze at," the trio write of the cash flow decrease, "for most operators it is expected to reduce (cash flow) during 2001 by no more than 1 percent to 3 percent." 

Most at risk are such stand-alone casinos as the Riviera and Hard Rock Hotel, which each generated nearly $30 million of cash flow last year and potentially faces a 10 percent decline this year in earnings before interest, taxes, depreciation and amortization. Bellagio was the Strip's top cash flow generator in 2000 at $294.6 million. 

"Of more concern for all Nevada operators," the Monday report continues, "is the potential impact to cash flows should visitation to Las Vegas soften during the second half of 2001 as a result of the moderating economy, the proliferation of Indian gaming in California, and the impact of higher energy costs (electrical, natural gas and gasoline) on the discretionary income of consumers, particularly in California and Nevada." 

Speculation has circulated for months about the potential impact on Las Vegas of rising energy prices, with Harrah's, Station Casinos and the Riviera each adding $3 room surcharges to ease the blow. 

The Strip's newest casinos, including Bellagio and The Venetian, are among the most energy efficient, according to the report. But many of the city's gaming companies have announced plans to increase conservation efforts, with some hiring consultants to help with the efforts. 

Last month, Gov. Kenny Guinn signed into law a plan ending Nevada's brief flirtation with the deregulation of electric utilities. Future price increases would come twice a year with the approval of the state's Public Utilities Commission. 

In March, California's PUC approved rate increases that will boost electricity bills by nearly 50 percent for that state's residents. 

Meantime, auto traffic to Las Vegas from Southern California was down 4.4 percent during the first three months of the year, according to the Las Vegas Convention and Visitors Authority. 

The culprits are believed to include the expansion of Southern California tribal casinos and weather-related closures to sections of Interstate 15, the main highway between the two regions. 

But rising energy and gasoline prices in the Golden State are viewed in the Bear, Stearns report as the primary factors slicing into the number of visits to Las Vegas by cost-conscious travelers. 

"As the summer driving season approaches, we will become increasingly concerned if the price of gasoline continues its upward trend," reads the report. 

The spread of the energy crisis to New Jersey, Connecticut and Midwest riverboat markets could also mean trouble elsewhere, with an additional speed bump created by the nation's economic turmoil. 

"More recently we have begun to see a moderation (or decline) in revenue growth in a number of markets, including Atlantic City, Iowa and Indiana, which we believe is attributable to the uncertain outlook for the economy," reads the report. 

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(c) 2001, Las Vegas Review-Journal. Distributed by Knight Ridder/Tribune Business News. MBG, MGG, STN, STN PR, HET, PPE,