Plea for NV Energy rate hike picked apart

Want to get big business and consumer advocates on the same page?

File a utility rate case.

Representatives of megaresorts, hospitals and individual ratepayers banded together Tuesday, as hearings into NV Energy's rate request continued, to pick apart the utility's plea for $250 million a year in added revenue. They scrutinized NV Energy's severance figures, labor expenses, development costs and accounting methods, among other details.

Start with those severance numbers.

NV Energy says it slashed full-time employee counts by 5 percent in 2009.

But attorneys for megaresorts and hospitals said the utility merely shifted jobs from full-time workers to contractors. Include contractors in labor counts, and the number of people working for the company fell less than 1 percent in 2009, said Kathleen Drakulich, an attorney representing casino companies.

Kevin Bethel, vice president, chief accounting officer and controller for NV Energy, protested, noting that mixing full-time workers and contractors doesn't show accurate employee counts.

Bethel also took questions about Ely Energy Center, a 1,500-megawatt coal-fired power plant canceled in February after requirements to curb greenhouse-gas emissions made it financially infeasible. NV Energy is looking to recoup its development costs.

Testimony turned testy when Tom Sheets, an attorney representing local hospital chains, asked for a line-by-line accounting of all Ely Energy Center expenses NV Energy wants to recover. NV Energy attorney Richard Trachok interjected to note that Sheets and other parties had their discovery period, and requested more than 1,000 pieces of data. Tuesday wasn't the time to conduct fresh discovery, Trachok said.

But Rebecca Wagner of the Public Utilities Commission of Nevada asked Trachok if NV Energy could produce the breakdown in later hearings, and he said it can.

Other issues dissected Tuesday include construction costs on Harry Allen, offshore testing of computer systems, travel expenses for employees who worked on linking northern and southern operating systems and whether NV Energy saw generally accepted accounting principles as a requirement or a recommendation. (GAAP practices are a requirement, Bethel said.)

Hearings into NV Energy's revenue requirement are scheduled to continue through Oct. 28. The commission took testimony in early October regarding NV Energy's request to bump its allowable rate of investor return. It will mull evidence regarding new rates during the first week in November.

NV Energy, whose current yearly revenue is $2.2 billion, says it needs an 11.4 percent increase in income to pay for expansion of its Harry Allen power plant and higher investor returns. The utility also says it must recover the cost of consolidating its northern and southern workforce and asset-management systems, which the company began linking in 2006.

If the utility gets its request, the average monthly residential bill would go from $140 to $147 on Jan. 1.

The state Bureau of Consumer Protection, which represents residential ratepayers in utility rate cases, filed evidence against the revenue increase. Consumer advocate Eric Witkoski says NV Energy could get by with $88 million a year in new revenue. The utility wouldn't need as much revenue if it cut employee costs by 4.4 percent, took a lower rate of return and shifted cost recovery for system efficiencies and plant construction to future rate cases.

To see filings in the case, visit the commission's website at puc.nv.gov. Go to "Docket Info" on the left, click on it and select "Electric Dockets." The rate case is Docket No. 11-06006. The commission has consolidated Docket No. 11-06007, which involves depreciation expenses associated with utility plant assets, and Docket No. 11-6008, which deals with planning costs for Ely Energy Center, into hearings for the general rate case.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.