Thank you for taking the necessary steps to let the Public Utilities Commission of Nevada (PUCN) know what you think about NV Energy’s rate restructuring proposal!
Following these directions on how to submit written public comment to the PUCN is an outline of what we hope are the essential points to consider about NV Energy’s proposed rate restructuring that, if approved, would be implemented beginning October 1.
How to Submit Comments
The June Consumer Sessions were only the first step. There will be a series of three Public Hearings starting on June 26 and concluding on August 12. There will be no public comment opportunities during the actual hearings. Written comments, however, will continue to be accepted until that final hearing concludes.
Many people have found the electronic comment system to be difficult to use. If, however, you prefer to go that route here is the link: https://puc.nv.gov/. The easiest way is to submit written comment is to send or hand deliver it to either of the Commission’s offices: 1150 East William Street, Carson City, Nevada 89701 or 9075 West Diablo Drive, Suite 250, Las Vegas, Nevada 89148. In your letters, be sure to reference Docket #24-02026.
Also, consider turning your comments into a Letter to the Editor and submitting it to the Reno Gazette Journal.
And now to the matter at hand!
What Is Happening with NV Energy?
NV Energy serves nearly 323,000 residential customers throughout Northern Nevada.
NV Energy is proposing to raise its flat rate for service across Northern Nevada while lowering how much customers pay for actual energy use.
In January of this year, NV Energy got approval for an additional $37.1million in annual revenue and increased the monthly service charge in Southern Nevada from $12.50 to $18.50.
In Northern Nevada in 2022, the basic service charge increased from $15.25 to $16.50. Now, in 2024, NV Energy has a proposal before the Public Utilities Commission of Nevada (PUCN) to more than TRIPLE the basic service charge by increasing it from $16.50 to $45.30 for single family residences. Customers in multifamily housing would see their basic rate more than DOUBLE increasing from $8 to $18.80. If approved, these new rates would go into effect beginning Oct 1.
In addition to the basic service charge spike, NV Energy is seeking an additional $95 million in annual revenue.
Why does NV Energy say they need to do this?
NV Energy claims the rate restructuring proposal, which is confined to the north for now, is designed to stabilize energy bills. The company says the rate increase is offset by declining fuel and power costs from record highs and is also proposing a reduction in the charges per kilowatt hour used. They claim this reduction in charges per kilowatt hour combined with the increase in base rates will result in overall reductions in power bills.
As justification for the rate restructuring, the company says it has a higher cost burden due to:
- inflation and rising interest rates,
- growing electricity demand due to a growing population,
- increased wildfire insurance premiums,
- the need to replace outdated infrastructure,
- technology upgrades for cybersecurity, and
- addressing a shortfall caused by net metering — credits residential solar producers get for adding electricity to the grid.
NV Energy also wants to increase its rate of return to investors from 9.5% to 10.4%, as well as requesting an increase in its rate of return from 7.14 percent to 7.95 percent for its cost of capital (the return premium required on investments to justify the risk taken by an investor).
What does this mean for you, the ratepayer?
The move is a departure from long standing utility regulatory policy that assesses energy costs based on consumption.
The basic service charge electric users pay typically covers costs incurred to serve individual customers such as service lines, meters and accounting and billing services, with the bulk of customers’ bills based on actual energy usage. If state regulators approve NV Energy’s request, Northern Nevada customers will pay more to cover fixed costs related to distribution, such as electric line extensions, poles and transformers — infrastructure that doesn’t directly serve customers. The money to fund those kinds of infrastructure projects currently comes from the volumetric charge (the actual electricity you use). NV Energy is trying to lower its risks to their revenue stream from factors such as weather or economic downturns at your expense.
The proposed rate design disproportionately affects low-income residents.
- Tripling the base rate for a single-family residence while simultaneously nearly halving the cost electric customers pay per kilowatt hour places a burden on lower and fixed income families. These families typically use less electricity and have had some control over their budgets by doing so. With a bill that starts at $45.30 before any light or appliance is turned on, the result is a higher proportion of these families’ incomes going to energy costs.
- Customers who typically use more energy are the ones who will see their bills decline because cost cutting is happening on the usage end.
- If this proposal goes through, NV will have the highest fixed charge in the nation for residential customers significantly surpassing Mississippi whose fixed charge is currently $37.41. Compare those numbers to the average service charge among 170 investor-owned utilities nationwide of $11.66.
There are costs to the planet. In a world where climate change is rapidly heating our planet and changing weather patterns, this kind of approach undermines our region’s efforts to use less and use cleaner energy sources.
- The rate hike reduces the rewards for using less electricity. People won’t save as much money by turning off lights or adjusting their air conditioning, discouraging them from cutting back on energy use.
- This proposal undermines the use of residential solar power.
- Net energy metering (NEM) customers who generate their own solar energy are penalized because they will see less benefit to using solar because more of their charges are unrelated to energy use. Furthermore, residents who made significant investments in rooftop solar with the expectation that over the long run they would receive a return on that investment are seeing that evaporate. NV Energy is essentially creating conditions where they can corner the energy market.
- By imposing unnecessary charges on solar customers, the decision jeopardizes the growth and viability of the solar industry in Nevada, a sector vital for the state’s economic and environmental health.
- This move not only impacts Nevada’s solar households but also poses a broader threat to the state’s requirement that 50% of the electricity utilities sold must come from renewable sources by 2030.
NV Energy’s focus on usage rate decreases as a long-term component in their claim that energy bills will decrease is misleading.
- Usage prices will come down because fuel costs are going down – at least right now they are. Remember, natural gas prices are volatile and could increase at any time.
- With a fixed rate this high, it is unlikely that bills will ever go below that threshold again. This will become the baseline for the next NV Energy proposal.
What could be done instead of this rate restructuring?
- Instead of raising the basic service charge, , NV Energy could implement time-of-use rates that better reflect actual costs to the grid, such as lower rates during the cheapest and cleanest generating hours and higher rates during peak usage times whether that’s during the day or time of year. Time-of-use rates can be structured to allow customers to opt-in to different rate structures that preserve incentives to conserve and move their most intensive energy consuming activities to the cheapest and cleanest generating hours.
- Change NV Energy’s payment model to turn it into a performance-based model that shifts their reward incentives away from the build out of infrastructure to metrics like cost containment, reliability, energy efficiency and greenhouse gas reduction.
- If fixed charge increases really are needed, they should be phased in over time and in significantly smaller increments. Rate discounts could be used to mitigate impacts on lower income and fixed income customers.
Information resources
The information in this guide has borrowed heavily from the following articles:
NV Energy proposes monthly service charge jump of $28 in Northern Nevada
NV Energy Proposal Bad News for Families that Want to Control Power Bills
How High Fixed Charges Will Burden Northern Nevadans
Indy Explains: Why NV Energy wants to triple Northern Nevada’s base rates
Northern Nevadans fear NV Energy plan would mean some of highest service charges in U.S.
OPINION: New performance-based payment structure needed for NV Energy