Utility regulators reject NV Energy's proposed rate change for Northern Nevada

Nevada utility regulators unanimously rejected a request from NV Energy to increase the base rate for its Northern Nevada customers by 175 percent, instead awarding the utility a fraction of the requested amount on Tuesday.

NV Energy, the state's largest electric utility, had sought to increase the base rate – the flat rate customers pay for electricity alone – for single-family homes by $28.80 per month while lowering the amount customers pay for that use actual energy numbers.

The proposal would have increased Northern Nevada's base rate from $16.50 to $45.30 a month, making it the highest in the United States “by a significant margin,” according to the state's Bureau of Consumer Protection.

NV Energy, which serves nearly 328,000 customers throughout Northern Nevada, had argued that the price change would guarantee more stable monthly electric bills. The utility also announced that it would simultaneously halve the cost customers pay per kilowatt hour for electricity. This move would not result in a net increase in average customer bills, according to the utility. But opponents said it would penalize those who conserve energy or use solar energy.

The proposed rate increase sparked significant public outcry — more than 250 people offered sharp comments at several consumer meetings hosted by utility regulators, and groups from the Nevada Conservation League to Solar United Neighbors voiced vocal opposition.

The Solar Energies Industry Association called the proposal “extreme (and) unsupported” and claimed that NV Energy was trying to circumvent regulatory protections for net energy metering customers “under the guise of bill stability.”

Instead, Nevada's three-member Public Utilities Commission approved a $2 per month, or 12 percent, increase for single-family homes in northern Nevada. The new monthly fee, set to take effect in October, will put Northern Nevada customers on par with the base rate paid by their Southern Nevada counterparts.

“NV Energy teams are already in the process of analyzing the various components of the order and what this means for Northern Nevada customers’ bills and rates,” a spokesperson for the utility said in an email.

Commissioner Randy Brown said NV Energy's original request was “far too high.”

According to Advanced Energy United, a national trade association focused on clean energy, the highest fixed rate in the nation for private utilities in Mississippi is $34.71. The national average is $11.66 among 170 other investor-owned utilities.

“Today’s decision not only prevents a catastrophic rate increase for households, but also shows that the PUCN has listened to consumer concerns,” Emilie Olson, Nevada director for Advanced Energy United, said in an email. “PUCN’s decision to opt for a modest increase instead demonstrates its commitment to prioritizing affordability for all consumers, protecting Northern Nevada ratepayers from unfair monthly rate increases, and setting a positive precedent that will help “To prevent similarly burdensome increases in base rates for consumers in the South.” Nevada too.”

In its draft regulation, the Commission noted that the proposed increase was “disproportionately large and not in the public interest”, noting that it would disproportionately affect low-consuming customers and hinder energy savings. The order countered NV Energy's price stability arguments by noting that the volatility of customers' bills was largely due to fuel costs.

NV Energy generates its electricity from a portfolio that includes coal, solar, geothermal and natural gas. The US Energy Information Administration expects natural gas prices in 2024 to remain lower than in previous years due to higher-than-average inventory levels. More than half of the electricity used in Nevada is generated by natural gas power plants.

If natural gas prices rise again, opponents of the tariff increase argued, customers' bills would also rise. NV Energy countered that increasing the base fee while reducing the usage fee would keep prices more stable in times of volatile natural gas prices.

In its original application, NV Energy described the base rate increase as necessary to cover capital costs in Northern Nevada, including expanding service and addressing a financial shortfall caused by net metering – credits given to private solar producers for injecting electricity received into the network. To accomplish this, the utility said it had to recoup nearly $106 million annually from ratepayers, with the largest portion of that, $95 million, coming from residential electricity customers.

State energy regulators also limited requested rate increases for multifamily housing and natural gas customers.

NV Energy requested an increase in the base rate paid by multifamily properties from $8 to $18.80 per month; The commission instead allows an increase to $9.25. The utility will also be allowed to increase the base rate for its small commercial and natural gas customers from $14 to $16, less than the $18 requested by NV Energy.

The commission also lowered NV Energy's overall application by setting the return on equity for shareholders at 9.65 percent, a small increase from the current rate of 9.5 percent but well below the utility's proposed increase to 10.4 percent .