Proposed electricity rate hike may grow

CARSON CITY — A rate increase billed as the smallest in more than a decade for Southern Nevada electricity customers may not end up that way when new rates take effect next year.

The Nevada Public Utilities Commission, as a result of an order by Commissioner David Noble, has decided to consider paying off the un­recovered investment in NV Energy’s Reid Gardner coal-fired plant as part of the three-year rate filing that would take effect Jan. 1.

The Nevada Bureau of Consumer Protection, in a filing with the commission, opposed the recommendation, arguing that the $20.8 million revenue increase sought by the utility would be increased by as much as $60 million a year if the PUC decided to recover the unrealized Reid Gardner investment over the next three years.

NV Energy, doing business as Nevada Power in Southern Nevada, did not propose to address the Reid Gardner investment issue until its 2017 rate filing.

But Dan Jacobsen, technical staff manager for the consumer protection bureau, said Noble’s July 9 order opens the door to that possibility in the current rate filing, which would mean bigger rate increases for customers.

The utility is expected on Friday to file information with the PUC on the potential effect on rates if the Reid Gardner investment is made part of the rate case.

A rate filing made on May 2 by NV Energy proposed a 0.9 percent overall increase across all rate classes. The effect of the proposal was estimated to be about 1.85 percent, or $2.82 a month, for an average residential customer in Southern Nevada.

Jacobsen said he has not yet seen what the rate increase would look like if the Reid Gardner investment issue is made part of the filing.

The PUC is expected to act on the rate proposal sometime this fall.

As a result of a bill passed by the Nevada Legislature in 2013, NV Energy is getting out of the coal-fired electricity generation business, which means closing the four units at the Reid Gardner plant near Moapa.

But Jacobsen said there is about $300 million of old investment in the coal-fired plant that the utility still must recover from ratepayers.

The investment had originally been expected to be paid off over nine years, he said. Paying it off in the next three years would require the estimated $60 million more in revenue per year, Jacobsen said.

As a result of state Senate Bill 123 from the 2013 session, NV Energy made a filing with the PUC on May 1 proposing to close three of the four Reid Gardner units by the end of this year. The fourth unit would close in 2017, with the utility ending its reliance on coal-fired electrical generation by 2019.

The coal-generated capacity is proposed to be replaced with solar facilities and natural gas production.

Jacobsen said the utility is proposing several major construction projects and acquisitions to replace the coal capacity that could total as much as $1 billion. Those costs will be borne by ratepayers in future years, which may be one reason the PUC wants to consider paying off the coal plant investment sooner rather than later, he said.

The news of a potential higher rate increase comes as a consumer session is held today beginning at 6 p.m. on the rate filing. The session is in Hearing Room A of the PUC at 9075 W. Diablo Drive, Suite 250, in Las Vegas.

Hearings on the application will begin Aug. 26 at 10 a.m.

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