April 18, 2024 3:18 pm
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NV Energy’s End-of-Session Surprise Rarely a Boon for Ratepayers

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by Dana Gentry, Nevada Current

Nevada lawmakers’ biennial sojourn in Carson City can be unpredictable, but as certain as snowfall in the early weeks of the session, so is the flexing of legislative muscle that manifests in the final weeks in the form of last-minute legislation at the behest of NV Energy.

This year is no different. A bill draft has been whispered about for weeks but has yet to be introduced. With an uneasy public clamoring over the cost of electricity, NV Energy may encounter more obstacles than usual. 

Assemblyman Howard Watts, chairman of the Assembly Committee on Natural Resources, may be the first obstacle.   

“There’s not any intention to try to hide things,” Watts said of his bill draft on behalf of NV Energy during a phone interview. “But we had to have a lot of honest conversations with a lot of different folks to try and figure out how to get the language into a good place.”

That ‘good place’ according to Watts, is one bereft of additional natural-gas powered generating stations, which was NV Energy’s original goal for the measure, according to three sources with knowledge of previous drafts who asked not to be named.

“I’m a strong believer that we need to move away from fossil fuels,” Watts said. “Fossil fuel volatility is what’s been one of the major factors that led to utility bills skyrocketing recently.”

NV Energy declined to comment. “We are waiting for the language in the bill to be formally introduced before providing statements,” said spokeswoman Katie Nannini.

Earlier this year, Gov. Joe Lombardo issued a cryptic ‘order’ on energy policy that appears to favor natural gas, including for powering utilities, a position that is at odds with the state’s. 

“To achieve Nevada’s goal of net-zero GHG emissions by 2050, we must transition from natural gas, including use as a fuel for power plants,” says the State of Nevada Climate Initiative from 2021.

NV Energy said in a news release the price it paid for natural gas on the open market  “consistently increased in 2022 by more than 70 percent and peaked in January of 2023, increasing nearly 500 percent since 2021. These significantly higher natural gas prices caused NV Energy’s costs to increase.”

It’s asking regulators for permission to manipulate summer power rates to ease the burden on customers, a proposition with potentially negative consequences, according to the state’s consumer advocate.  

Watts says NV Energy and other utilities are seeking to take advantage of federal climate and infrastructure initiatives “which have provided incentives to help reduce the cost of those projects, and they only apply to clean energy projects,” such as battery storage.

He says the bill he’s been working on also seeks to remove loopholes that allow utilities to petition the Public Utilities Commission outside the integrated resource process, which is a regulatory  mechanism for utilities to adjust their energy needs. 

Watts says he was not pleased that NV Energy went outside the process earlier this year to obtain permission to build a natural-gas fired power plant. 

“Their (utilities’) proposals to bring on these additional facilities would still have to go through that process and weigh the cost benefit analysis as well as the impact that it’s going to have on our state’s renewable portfolio standard and our overall goals to reduce emissions,” he said.

With just days remaining in the legislative session, Watts says he doesn’t know when the bill will be introduced.  

Nickels and dimes

The Nevada Legislature created the Nevada Public Service Commission in 1919, vesting it with the power to regulate utilities. But that hasn’t stopped lawmakers from intervening when asked by utility companies, who often prefer the pliable turf of the legislative building to the more statutorily dictated confines of the PUC. 

Many of the often overlooked, lesser charges that appear on NV Energy’s monthly bills can be traced directly to legislation, some of it passed in the waning hours of the session.

Green Link

Senate Bill 448, passed by the 2021 Legislature, allows NV Energy to pursue construction of a $2.5 billion transmission line network rejected by the PUC. The Federal Energy Regulatory Commission, rather than the PUC, will have rate jurisdiction for the project because of the interstate nature of the transmission lines. The bill, sponsored by then-Sen. Chris Brooks, a clean energy advocate, was introduced on May 13, 2021 on the 102nd day of the 120-day session. Brooks is married to Michele White, Gov. Steve Sisolak’s chief of staff at the time. 

NV Energy’s CEO told lawmakers that ratepayers would not feel the project’s economic pinch for years. But just two years later, the utility has already received approval from FERC to seek incentives, or the right to recoup its costs for construction or cancellation of the project from ratepayers.

The passage of Green Link mirrored an effort a decade earlier by then-Sen. Mike Schneider, a Democrat, who carried NV Energy’s water in a last-minute push to require the PUC to allow the utility to build transmission lines. The legislation, Assembly Bill 216, passed in the final minutes of the session without being read by lawmakers, but was vetoed by Gov. Brian Sandoval.  

Natural Disaster Protection Plan 

Senate Bill 329, passed in 2019, requires customers to foot the bill for an electric utility’s expenditures in developing and implementing a natural disaster protection plan. The charge is based on usage. The bill was sponsored by Brooks.

Energy Efficiency Program Rate (EEPR)

Passed in 2009, Senate Bill 358 provides a fee to compensate utilities for the cost of energy efficiency and conservation programs, such as refrigerator recycling, pool pump and heater rebates, and discounts for LED lights bulbs. The fee is adjusted annually as part of the Deferred Energy Adjustment. 

Renewable Energy Program Rate (REPR)

The fee supports incentives for renewable energy programs such as the Solar Energy Systems Incentive Program (SESIP), created in 2007 by Senate Bill 437 for customers who install solar photovoltaic systems.  The REPR also supports a rebate program for customers who install wind energy systems. 

Temporary Renewable Energy Development

Assembly Bill 3, passed during the 2005 special session, ensures energy developers with contracts to sell electricity to NV Energy who were having trouble getting financing for their plants would be paid. Nevada Solar One is the only renewable generating plant that is paid through the TRED trust, according to NV Energy. 

The TRED rate is based on usage and is adjusted annually as part of NV Energy’s Deferred Energy Adjustment. 

Universal energy charge

Approved by lawmakers in 2001, 75% of the consumption-based fee provides energy assistance to low-income households.  25% is used to weatherize households in need.  

Local government fees

The Legislature passed Senate Bill 568 in 1995, establishing a 5% cap on the fees a local government can impose on a public utility’s gross revenues derived in the jurisdiction. 

Basic Monthly Service Charge 

In 1975, the Nevada Legislature passed Assembly Bill 707, establishing the Basic Monthly Service Charge, which is currently fixed at $12.50, regardless of electricity usage.  Non-residential customers pay a higher service charge than residential customers.  The Legislature requires utilities to file an application at least once every three years to adjust rates, including the basic monthly service charge. 

Deferred Energy Adjustment 

The difference between the cost NV Energy pays for its fuel and purchased power and the amount it collects through its base rate is either deferred and collected over time from customers or refunded in the event of overpayment.  The Deferred Energy Adjustment Account was created by Assembly Bill 707 during the 1975 session. NV Energy is currently collecting a balance of more than $1 billion owed by ratepayers. 

This article was originally published on Nevada Current and is republished here under a Creative Commons License