AG’s office calls NV Energy’s new mandatory demand charge ‘unlawful’

The Attorney General’s Bureau of Consumer Protection is calling NV Energy’s newly approved mandatory demand charge “unlawful,” asking the Public Utilities Commission to reverse its decision.

On Oct. 7, the BCP, filed a petition for reconsideration with the PUCN, saying the demand charge violates Nevada law which prohibits mandatory time-of-use rates for all customers. Additionally, the bureau also said the demand charge “lacks substantial evidence and should be reconsidered,” citing multiple organizations calling for it’s rejection and customer confusion.

The BCP accused the PUCN of “unreasonably” siding with the utility, saying the demand charge would “take Nevada electric utility ratepayers into uncharted waters.

“The potential harm in imposing a new and confusing demand charge rate structure on ratepayers is too great, and therefore the BCP respectfully requests the Commission to reverse its decision and consider other reasonable alternatives,” said the petition.

The PUCN will present a decision on the BCP’s petition for reconsideration on Nov. 18 during its regular meeting.

A spokesperson from NV Energy said: “NV Energy believes our proposal is consistent with state law and we’ll continue to work through the reconsideration process with the Commission.”

BCP’s Petition

Nevada Revised Statute 704.085, which governs public utilities, prohibits electric utilities and the PUCN from changing or approving any rate schedules that charge customers based on a time of usage. The only exception is if the customer elects to purchase utilities as such a rate, which NV Energy does offer through its Time-of-Use Rates.

The BCP claims the demand charge is unlawful to impose on all customers, solar or non-solar, because it would charge customers based on a 15-minute peak in their energy usage per day, rather than solely on how much energy they used.

“Specifically, a customer would incur a higher rate for electricity used over a 15- minute period in a day than if that same electricity usage was consumed over a day,” said the BCP in its petition. “Such a scenario is prohibited by the plain language of NRS 704.085. As this is a violation of statute, the approval of the mandatory demand charge should be reversed.”

Further in their argument, they also claim the demand charge “lacks substantial evidence,” citing multiple interveners in the case calling for the rejection of the demand charge. They admonished the PUCN for approving the charge despite interveners, saying: “Perplexingly, the Commission accepted NPC’s position, while unreasonably dismissing the concerns of the other parties.”

According to BCP’s petition, the PUCN said they justified approving the demand charge due to “the uniqueness of the circumstances in Nevada.”

“The so-called ‘uniqueness’ of Nevada is not a valid, sufficient rationale to implement a mandatory untested new time-based rate structure,” said the BCP’s petition. “Other states have ‘unique’ legal and factual circumstances and have not been subjected to such a mandatory demand charge and neither should Nevada.”

The BCP also cited customer reaction to the demand charge approval, calling the reaction “vehemently negative, confounding and filled with fear of rate shock.”

What is the demand charge?

The demand charge, which was approved for Southern Nevada customers on Sept. 16 by the PUCN, would be mandatory for all residential and small business customers. If not reversed, it would go into effect on April 16. Currently, only larger customers like casinos have to pay demand charges.

The approval of the demand charge creates a two-pronged approach to billing customers each month: how many kilowatts a customer used during their highest 15-minute period of usage combined with the typical per kilowatt hours used each month. But, in April, the per kilowatt hour charge will go down to account for the demand charge

Solar customers are not eligible to use net metering credits to offset the cost of the demand charge, which would result in an around $20 increase in their utility bill per month.

This is a part of a larger general rate review, which increased NV Energy’s general revenue requirement by over $118 million.

The draft order from the PUCN claims the demand charge is not a time-of-use rate and would give customers the ability to lower their bills by spreading their energy usage throughout the day. Additionally, the draft order states the rate design for net metering customers does not cover the full cost of serving them, which results in $50 million being collected from non-net metering customers annually to recoup costs.

Contact Emerson Drewes at edrewes@reviewjournal.com. Follow @EmersonDrewes on X.