Is Nevada Power planning to raise residential rates again?

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The Nevada Public Utilities Commission next week will give consumers another chance to comment on a Nevada Energy rate plan offered in response to the state’s new net metering law.

The Dec. 6 PUC session in Las Vegas delves into an array of topics that regulators, the utility, consumers and the solar industry have debated for years.

Net metering refers to a billing system crediting ratepayers for energy generated from rooftop solar systems when the power generated exceeds what the ratepayer uses per month. Supporters of such credits say they will help ramp up Nevada’s struggling solar industry, but detractors describe the credits as special-interest subsidies.

The Nevada PUC in 2015 moved to eliminate net metering at retail rates for new solar customers, but that action led many solar companies to pull out of the state. The legislature this year approved AB 405, a bill that reinstated net metering for new solar customers at rates of between 95 and 75 percent of retail over the life of the solar panels.

Nevada Energy last month proposed to maintain its current revenue needs over the next three years, but residential customers in southern Nevada would see their fixed monthly service charge rise from $12.75 to $17.36, an increase of $4.61, according to this initial proposal. The per-kilowatt-hour charges, however, would decrease. Overall, an average family’s bill would increase by about $2.64 per month, or less than 2 percent.

But the company on Nov. 22 updated its PUC filing, deferring any increase in fixed rates until after a 2018 statewide vote on injecting more competition into the energy market.

“The rate increase certainly shouldn’t be a surprise to anybody,” Michael Schaus, spokesman for the Nevada Policy Research Institute, told Watchdog.org. “Nevada Energy, a regulated monopoly, has to look for ways to recoup costs to compensate for revenue reductions resulting from the return of net metering,” Schaus said. “State lawmakers restored net metering to a level based on retail rates as way to get solar companies to do more business in Nevada”

“From our perspective, that was a step in the wrong direction,” Mr. Schaus said.

According to Schaus “The Nevada Policy Research Institute favors a more competitive energy market modeled after the one now in place in Texas. Under Nevada’s current system, the legislature is determining the net metering rate rather that an open market where multiple companies compete for a customer base”

“But one danger we see here … would be the renewable portfolio standards in the state,” he said. Those standards require utilities to have a certain percentage of their power coming from solar and wind generation – two sources that Schaus said are environmentally damaging.

Regardless of whether Nevada Energy eventually seeks and gets a major rate hike, consumers are going to see more increases in rates due to the renewable standards that have been imposed in Nevada, Schaus said.

Nevada voters will have a chance to approve a shift to a more competitive energy market in November 2018. Voters approved that concept in 2016, but a second favorable vote is required before it becomes part of the state constitution.

Peter Kostes, spokesman for the Nevada PUC, said the commission couldn’t comment on rate issues that involved pending litigation. “It is an open case, and the rate design phase will commence on Dec. 4,” Kostes said in an email to Watchdog.org. “A decision will issue as soon as possible.”

Sara Gersen, an attorney for EarthJustice, argues that Nevada Energy’s previous rate plan would shift the cost burden from those who use a lot of energy to those who use less energy, including lower-income Nevadans.

“What that means is that they want to make more money through the fixed part of the residential customers’ monthly residential bill,” Gersen told Watchdog.org, adding that the fixed costs can’t be avoided by cutting energy use.

Nevada Energy has argued that the company is simply responding to AB 405, she said, but the company is among many utilities across the country that have been requesting increases in fixed charges, a strategy that allows the company to reduce financial risks.

“It protects them and their shareholders in case customers decide to pay less money by using less energy or installing solar panels,” Gersen said.

EarthJustice represents Vote Solar, a solar power advocacy organization, in the current rate proceeding before the Nevada PUC.

Nevada Energy has had a history of opposition to net metering, according to Gersen, and the company has balked at putting it back in place despite clear language in AB 405.

“The Nevada legislature and Gov. [Brian] Sandoval deserve a lot of credit for AB 405 and taking the leadership to restore net metering,” she said.

The law will do a lot to reinvigorate the solar industry in Nevada and give residents a growing supply of renewable energy, Gersen said.

It is true that net metering does help reduce the need for the utility to find new energy supplies to meet future demand, but it doesn’t provide short-term financial rewards, according to Gersen.

“That doesn’t help Nevada Energy make money,” she said.

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