Parties say Nevada Power is over earning, customers should benefit

CARSON CITY — Businesses and organizations participating in Nevada Power’s general rate case testified Wednesday at the PUC that the utility is over earning and customers of the utility should see some financial benefit as a result.

Attorney Fred Schmidt, representing MGM Resorts International, said customers deserve to share in the over earnings reported by the company, part of NV Energy which in turn is owned by Berkshire Hathaway.

“But we believe the ratepayers are entitled to at least some rate reductions,” he told Public Utilities Commission Chairman Joe Reynolds, the presiding officer over the triennial general rate review application.

The rate case has raised concerns with consumer advocates because of a proposed increase in the fixed monthly charge for residential customers by 31 percent to $16.76 starting Jan. 1. The hearing started Wednesday and is expected to continue intermittently through the remainder of the year.

While MGM is now receiving its own supply of electricity after exiting as a retail customer of Nevada Power, the company has concerns and could be affected financially by the filing, Schmidt said.

A proposed change in the Distribution Only Service tariffs would add a $3 megawatt hour charge, he said.

“Since MGM’s rough annual load is in the range of one million megawatt hours a year, that is $3 million to us,” Schmidt said. “We think that is unfair, especially when the company doesn’t need a rate increase.”

Michael Saunders, representing the Bureau of Consumer Protection in the attorney general’s office, said testimony from the agency’s witness that will be presented later in the hearing will suggest the return on equity should be set at 9.2 percent.

The company was authorized a 9.8 percent return three years ago.

Tyler Pepple, representing a group called the Smart Energy Alliance, also testified that Nevada Power is substantially over earning.

“So SEA’s overall goal in this case is to return Nevada Power to a level of rates for Nevadans that are fair, just and reasonable,” he said.

The rate of return authorized for Nevada Power should be decreased, Pepple said.

Curt Ledford, representing the Southern Nevada Gaming Group, a coalition that includes the Las Vegas Sands Corp., Binion’s and the Four Queens, among others, said energy costs are a large component of the cost of doing business.

“Southern Nevada Gaming Group does agree that there is reason to show in this application that there should be a decrease for large users,” he said. “The return on equity is too high and the rate of return should be decreased as well.”

NV Energy said last month that it is asking for no additional revenue for its core operations in the filing. The increase in the fixed charge for residential customers would be mostly offset by lower rates for actual electricity use.

But some residential customers would see an increase in rates in the amended filing of about 2 percent if it wins approval from the PUC.

Nevada Power said it amended its filing with the fixed charge fee increase because of action by the Nevada Legislature this year to fold rooftop solar customers in with all other residential customers.

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-461-3820. Follow @seanw801 on Twitter.