NV Energy’s request would increase the average cost of the Natural Disaster Protection Plan from about $2.50 a month to $5. (Photo: NV Energy National Disaster Protection Plan brochure)
Southern Nevada residents will subsidize the bulk of NV Energy’s $30 million budget for disaster preparedness efforts in 2023, most of them in Northern Nevada.
The Public Utilities Commission voted Monday to approve the plan, despite NV Energy’s failure to “adequately assess or quantify the socialized benefits associated” with the costs of the utility’s Natural Disaster Protection Plan, according to the order written by PUC chairwoman Hayley Williamson.
Commissioner and presiding officer Tammy Cordova on Monday filed a dissent, opposing the subsidies, which she said “were not supported by the evidentiary record.”
However, Cordova joined her colleagues in approving portions of the order.
“I want to assure Nevadans who are struggling to pay utility bills, we are listening to you,” Williamson said during the meeting. “The cost of electricity is one very important factor that I and this commission consider when making decisions.”
Nevadans are currently struggling to pay summer power bills. NV Energy’s request would increase the average cost of the NDPP from about $2.50 a month to $5.
Hearing officer Sam Crano, appointed as acting commissioner Monday morning to fill a vacancy that has yet to be addressed by Gov. Joe Lombardo, is statutorily ineligible to be appointed to the post by Lombardo, but cast the deciding vote Monday in NV Energy’s favor.
State law prohibits the governor from appointing a commissioner or acting commissioner who would result in more than two members of the PUC being ”from the same field of experience.”
Lombardo did not respond to requests for comment on his failure to fill the void on the PUC.
Williamson, Cordova, and Crano all criticized NV Energy’s report, authored by Jeremy Aguero of Applied Analysis, which attempts to justify saddling Southern Nevada ratepayers with the utility’s disaster prevention costs – mostly related to wildfires.
The Attorney General’s Bureau of Consumer Protection testified that Aguero’s analysis “failed to properly assess and quantify” the socialized benefits of the NDPP, and called the analysis “overly simplistic.”
The BCP testified Aguero quantified the benefits of the NDPP by “dividing the metrics of GDP, property values, and tourism by the total NDPP spend of $1.7 billion to find a break even point.”
“The Commission finds that the method used does not adequately assess or quantify the socialized benefits associated with NDPP costs,” Williamson wrote in her order.
“NV Energy states that parties point to issues around Mr. Aguero’s conclusions and argue that the report should be found inadequate because they disagree with those conclusions,” Williamson’s order says.
NV Energy’s Natural Disaster Protection Plan is a creation of the 2019 Legislature in response to the Camp fire in California, which killed 85 people and was ignited by a power line.
“And today we see the news coming out of Maui, which so far is speculated that the devastating Lahaina fires have started from downed power lines,” Williamson said.
“Traditionally the cost-causer pays,” Williamson said Monday when addressing NV Energy’s requested statewide rate. “However, for the NDPP, no one service territory caused the costs incurred, but rather the Legislature recognized statewide benefits from disaster planning and mitigation should be paid for statewide,” Williamson said, adding the “public policy behind the NDPP has statewide implications that necessitate at least partial socialization,”
“A single rate is exactly the cost effective strategy and method the Nevada Legislature intended,” Sen. Melanie Schieble, then-Sen. Chris Brooks, and Assemblywoman Danielle Monroe-Moreno wrote in 2020 to the Public Utilities Commission as it contemplated a statewide disaster protection rate.
Schieble and Monroe-Moreno, both of Southern Nevada, did not respond to requests for comment.
The 2019 law makes no mention of the need for a statewide rate.
NV Energy argues it’s providing a statewide benefit via its preparedness efforts, but admitted a disaster in the north would have no measurable effect on local economies elsewhere.
Attorneys for the gaming industry argued the utility is meeting its obligation to mitigate wildfires, not providing a statewide benefit, and argued against the subsidies.
“We believe those changes are imperative to the commission issuing a lawful decision,” said attorney Laura Grenier, representing the Nevada Resort Association, Caesars Entertainment, and MGM Resorts International.
It’s unknown whether any intervening parties, such as the gaming industry, intend to appeal the PUC’s decision.
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