PUC order suggests NV Energy won’t get sought-after rate increase

A draft order from the Public Utilities Commission of Nevada indicates that NV Energy won't get the rate increase it wanted to help it pay for energy-efficiency measures.

The order recommends cutting back on recovery of the costs the local power utility claims it has incurred by promoting energy conservation.

NV Energy filed for the higher rate in October, asking the commission for a Southern Nevada rate increase of around 5 percent to cover company-sponsored energy-efficiency programs, and to recoup revenue that the company said it lost as a result of those initiatives.

Utility officials said in the filing that the company would spend $71 million in 2011 on energy-efficiency programs in Southern Nevada, including home-weatherization services for low-income residents, collection of outmoded refrigerators and promotion of energy-saving light bulbs.

The filing also notes the company has lost or will lose nearly $35 million in revenue from 2008 through 2011, as consumers used 767,253 fewer megawatt hours of electricity.

Recovering those expenses and lower sales would require a rate boost of just under 5 percent, the company said.

But the commission's draft order calls for allowing just $58 million in expenses for local energy-efficiency initiatives.

The commission's decision on the $35 million in lost revenue is less clear-cut, though it appears NV Energy won't get its full request there, either.

To understand how it works, start with a breakdown of three key categories of lost sales.

First is the loss's time period. NV Energy asked to recoup missing revenue from Jan. 1, 2008, through Dec. 31, 2011, but the commission's order calls for moving the recovery start date to Dec. 1, 2008.

Second is the free-ridership concept, which accounts for people likely to have participated in energy-saving programs even if NV Energy hadn't invested in them -- the consumer who wanted compact fluorescent light bulbs regardless of utility promotions or subsidies, for example. The idea of tallying free ridership is to ensure the power company isn't recovering revenue it would have lost anyway.

NV Energy wants to offset free ridership by weighing it against other indicators, including spillover effects from consumers who bought into energy-saving programs strictly because of NV Energy's efforts. The commission rejected that argument in its draft order, telling NV Energy officials they must come up with concrete spillover numbers before they can use them to counterbalance free ridership.

Finally, there are estimated savings from light bulbs based on average hours per day they're used. NV Energy's filing calculated savings based on 2.5 hours a day; the draft order dropped that number to two hours a day.

The rate case is the first of its kind since a 2009 state law began requiring NV Energy to separate recovery of its conservation costs from the general rate cases it files every three years. The utility will file its next general rate case on June 1.

Because the draft order isn't final, NV Energy executives declined comment on it or on how the commission's findings might affect the rate increase they asked for.

The commission will discuss the draft order in a meeting on Monday at 9:30 a.m., at the agency's headquarters at 9075 W. Diablo Drive.

To look at the draft order, visit the commission's website at puc.nv.gov. Click on "Docket Info," and choose "Electric Dockets." The docket number for the Southern Nevada rate case is 10-10024.

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