Electricity customers to see barely detectable increase in rates

CARSON CITY — Southern Nevada’s 859,000 residential and commercial electric utility customers will see a negligible increase in their rates starting Jan. 1 after the Nevada Public Utilities Commission on Thursday approved an agreement reached by NV Energy and other parties on its three-year general rate filing.

For the average residential customer, the increase will be 10 cents a month.

PUC Commissioner Commissioner Rebecca Wagner said it was amazing to see a general rate case resolved via a settlement.

“I never thought I would ever see that,” she said.

Chairwoman Alaina Burtenshaw agreed, thanking the parties involved for coming together to produce a good result for ratepayers.

In public testimony, Barry Gold, representing AARP Nevada, thanked the parties for working out an agreement that will benefit residential customers, particularly “the little guy or girl.”

The final agreement contrasts with earlier filings from the utility that would have seen average residential rates increase by $2.82 a month and then, in a second proposal, by $3.93 a month.

The agreement between NV Energy, doing business in Southern Nevada as Nevada Power, the staff of the PUC, the Bureau of Consumer Protection, the Southern Nevada Hotel Group and the Alliance for Solar Choice will result in smallest impact on the company’s Southern Nevada customers in more than a decade.

The agreement, which will last for three years, does reflect an increase in the monthly service charge from $10 to $12.75. This increase is offset by a reduction in the per kilowatt hour charge, however.

Because of these changes, a typical single-family residential customer bill of $152.19, based on average use of 1,141 kilowatt hours a month, will see an increase of $0.10, or 0.07 percent, effective Jan. 1.

The increases were described as “barely noticeable” across all rate classes by Shawn Elicegui, vice president of regulatory affairs at NV Energy.

NV Energy President and CEO Paul Caudill said the agreement was made possible through a combination of significant cost savings achieved by the utility in 2014 and reductions in the recovery of capital costs.

“This agreement reflects NV Energy’s commitment to support our customers by holding rates steady at a time when many in our Southern Nevada community are rebounding from a tough economic climate,” he said. “Through the support and hard work of my colleagues at the company, we have been able to reduce our operating costs without employee lay-offs or a decrease in community support. Importantly, through the performance of our power plants and transmission and distribution assets, we continue to provide safe, cost-effective, reliable energy that our customers deserve.”

Caudill said the modest rate increase is possible for two main reasons. One is the savings achieved through efficiencies, including the use of smart meters, that saw a reduction in operation and maintenance expense of $59 million, or 20 percent, in the first six months of 2014 compared to the same period in 2013.

The other is due to a reduction in the recovery of capital costs proposed by the company. In 2013 the company voluntarily reduced previous investments by $42 million. There is also a reduction in investment in utility plant that the company will recover by about $27 million.

This was done while providing a $20 million credit to customers in January 2014, and a $16 million contribution to its charitable foundation.

Caudill said that while the recovery of capital costs have been reduced, it does not mean that customers will get a rate shock in 2017 when the company makes its next filing. The costs of retiring the electricity production at the company’s Reid Gardner coal plant near Moapa, and shifting production to solar and other sources, is built into the company’s long-term business plan, he said.

“That’s not to say that we would not have a rate increase, but it’s not going to be something that is not manageable,” Caudill said. “Our thought behind all of this is that we want to provide a long-term, predictable, stable rate path for our customers in all of our classes. What we don’t want anyone to jump to a conclusion of is that in 2017, we’re going to see some very significant rate increases as a result of these decisions.”

Contact Capital Bureau reporter Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801