State Bureau of Consumer Protection appeals NV Energy bid to recoup costs from customers
The state argues NV Energy is now seeking economic incentives “on the very transmission projects” the utility lobbied legislators to approve. (Getty Images)
Nevada’s Bureau of Consumer Protection is asking the Federal Energy Regulatory Commission to reconsider its order granting NV Energy the ability to seek rate hikes to recoup the costs of its $2.5 billion Greenlink transmission line project. The appeal comes as Nevada ratepayers brace for power bills expected to average $470 in July in Las Vegas.
In 2020, NV Energy proposed the 600-mile project – a western transmission line from Las Vegas to Yerington, and a northern line from Yerington to Ely. The PUC, warning against “rate shock”, allowed NV Energy to proceed on the western line but only allowed permitting and land acquisition, not construction, of the northern line.
State lawmakers stepped in and approved the entire plan the following year.
Nevada Consumer Advocate and head of the Bureau of Consumer Protection Ernest Figueroa argues NV Energy’s “lobbying of the Nevada Legislature to pass Senate Bill 448 was done to not only circumvent the denial of construction of portions of the Greenlink Nevada project but to request and receive incentives on the very transmission projects that the Companies lobbied to build.”
The state says FERC erred when it found Nevada law did not require NV Energy to construct Greenlink. The law permitted the PUC to tweak the utility’s request but not deny it.
“Therefore, the Commission’s Order fails to address the protesters’ arguments that the project should be ineligible for incentives,” the BCP wrote in its request for rehearing.
Additionally, the BCP asserts FERC’s ruling “fails to make any findings that the incentive rate treatments will benefit customers by ensuring reliability and reducing the cost of delivered power via reducing transmission congestion.”
The state cited a 2006 order in which FERC noted a rule at issue was designed “to benefit customers by providing real incentives to encourage new infrastructure, not simply increasing rates in a manner that has no correlation to encouraging new investment.”
“In this case, the Commission’s Order simply increases rates because there is no correlation between the incentives and the new investment. Incentive ratemaking is not necessary for the Greenlink Nevada project to be built and, therefore, is not in the public interest,” the BCP wrote in its appeal.
In a statement, NV Energy spokeswoman Katie Nannini says FERC’s order “does not apply to any of NV Energy’s industrial, commercial or residential retail customers,” because FERC only has jurisdiction over the utility’s “delivery of service” customers – Caesars Entertainment, MGM Resorts International, Peppermill in Reno, Sahara, Switch, and Wynn Resorts. The businesses receive electricity from NV Energy but it’s purchased from other sources. The state Public Utilities Commission has jurisdiction over customers who buy and receive their electricity from NV Energy.
The BCP says NV Energy’s argument is false.
“Nevada’s bundled ratepayers are impacted by the Commission’s Order,” says its appeal, noting that Nevada law requires energy providers to join a regional transmission organization by 2030, which will make ratepayers liable for the costs.
RTOs are non-profit electric power transmission operators that have federal authority to oversee multi-state operations and impose rates as well as terms and conditions of the transmission services they operate. They are designed to improve efficiency and reliability, while reducing government oversight.
“All the Companies’ ratepayers – bundled and distribution-only service – will be paying for granted incentives depending on the following factors: 1) the timing of when the Companies join a regional transmission organization; 2) the timing of when the Companies complete the Greenlink projects; 3), the timing of when the Companies file a Section 205 (rate) case; and 4) when the five-year amortization period for the regulatory asset incentive begins,” the BCP wrote.
Tyson Slocum of Public Citizen, a utility watchdog organization, agrees.
“Joining an RTO will place all of NV Energy’s transmission – including Greenlink – into rates for all customers,” he says.
NV Energy would not definitively say it intends to abide by the legislative mandate and join an RTO.
“NV Energy is actively involved in the development of regional markets and analyzing the most appropriate path forward for Nevada,” Nannini said via email. “The service provided by and recovery of existing and future investments of the regional transmission organization participants assets will be included in that analysis, along with other issues such as governance, resource adequacy, congestion management, greenhouse gas accounting, etc.”
Nannini says Greenlink will be complete prior to 2030, “so NV Energy cannot ignore the impacts of the project prior to implementation of a regional transmission organization.”
The BCP asserts FERC should require NV Energy to provide the annual costs associated with implementing Greenlink, and says without it, it’s unclear how the utility’s customers benefit from paying for the project.
“The estimates for each incentive would depend on if or when they are requested and the outcome of a public federal regulatory proceeding,” said Nanini with NV Energy. “For example, the ability to recover prudently-incurred costs in the event thant the Greenlink Project must be abandoned for factors beyond NV Energy’s control, is something we do not expect to utilize. However, having it granted by FERC facilitates the ability to manage and procure materials for the project cost effectively and provides additional recovery assurance to lenders to help lower the financing costs during the construction cycle which ultimately benefits customers.”
A resolution of the state’s request for a rehearing could be months or even years in the making, according to Slocum of Public Citizen, which filed a protest with FERC regarding NV Energy’s petition to recover its costs.
“I don’t think there’s a chance that FERC overturns itself on its substantive reply,” says Slocum.
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