“This risk should be borne by the shareholders of NPC’s direct and indirect holding companies, NV Energy, Inc. and Berkshire Hathaway Energy, rather than the captive ratepayers,” the Bureau of Consumer Protection motion says. (Photo: Ronda Churchill/Nevada Current)
NV Energy’s proposed summer rate cut is a risky proposal that sets bad precedent and warrants more attention from regulators, according to a motion filed Thursday by the Attorney General’s Bureau of Consumer Protection with the Public Utilities Commission.
Consumer Advocate Ernest Figueroa says the BCP supports the utility’s effort to provide rate relief to customers, but argues NV Energy is attempting to bypass regulatory and public scrutiny via an informational filing that does not allow “BCP to represent the ratepayers of Nevada…”
Under the utility’s proposal, a Southern Nevada customer consuming the July average of 2,330 kilowatts would pay $409, instead of $472 without the rate cut, according to the consumer advocate.
NV Energy is proposing to achieve lower summer rates by manipulating its deferred energy adjustment rate (DEAA), which is based on energy the company purchases now and charges customers for later. The utility is carrying $972 million in uncollected charges in Southern Nevada, where a credit to the deferred rate would lower summer bills. NV Energy has $159 million in uncollected revenue from ratepayers in Northern Nevada.
The proposed rate cuts would add close to $600 million to the utility’s balance of more than $1 billion in deferred billings statewide.
NV Energy earns about 8% to carry that balance, and passes the cost through to customers.
The BCP says NV Energy’s attempt to file an informational rather than contested rate filing deprives the consumer advocate of challenging the scope of those costs that would be incurred by consumers.
“Does good cause exist for the Commission to grant the rate deviation if the total rates paid by customers over time will actually be higher rather than lower with the deviation?” asks the BCP in its motion.
The PUC this week told NV Energy to answer that question.
State law allows the utility to increase or decrease the DEAA rate by no more than one-quarter of a cent every three months, but the PUC can approve requests to exceed that limit. The consumer advocate says that process requires regulatory scrutiny not envisioned by NV Energy’s filing.
While NV Energy is currently attempting to manipulate the DEAA in customers’ favor, albeit temporarily, “the utility can use this ‘precedent’ in a future filing when it wants to unilaterally increase the DEAA rate above its statutory formulaic calculation,” the BCP’s motion argues. “The proper statutory procedures for changing rates must be adhered to regardless if the change in rates is a decrease or an increase.”
“Given the uncertainty about future natural gas prices, it is extremely risky” for NV Energy to achieve lower rates in Southern Nevada via a credit on deferred energy rates that will remain long after the three-month rate cut has ended, according to the BCP motion.
Lower natural gas prices would afford NV Energy greater revenue and allow it to pay down its uncollected balance. But in the event of high natural gas prices, the almost $600 million in summer rate relief would be added to the utility’s deferred account.
“This risk should be borne by the shareholders of NPC’s direct and indirect holding companies, NV Energy, Inc. and Berkshire Hathaway Energy, rather than the captive ratepayers,” the BCP contends.
The BCP offers an alternative it says “would provide summer rate relief from the unreasonable levels that NPC’s fuel and purchased power rates have increased since January 2021.”
The utility’s fuel and purchased power rates for Southern Nevada customers will have increased $1.8 billion dollars since January 2021 without the requested rate cut, and $1.2 billion dollars with the rate relief, according to the BCP.
The BCP offers an alternative – a three-month fuel and purchased power rider credit rate for residential and non-residential customers it says “is much less risky because it is only a temporary credit for three months” while NV Energy’s proposal locks in “credit DEAA rates for nine months for residential customers and 18 months for non-residential customers at a time when the DEAA balance is under-collected by nearly $1 billion dollars.”
The utility’s “customers need accurate information so they can plan accordingly, such as raising thermostats to 78 degrees or higher, to lessen their summer electric bills,” the BCP’s motion says.
NV Energy did not immediately respond to requests for comment.
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