Consumer advocate backs delay of NV Energy rate increase

The state consumer advocate does not want electric rates to increase in Southern Nevada, but if state regulators raise rates, he agrees with a utility proposal to delay the start of the new rates for two months.

Advocate Eric Witkoski and utility NV Energy say that it’s better not to hit customers with a rate increase potentially as high as 17.5 percent in midsummer.

The advocate and utility say that any increase in utility rates should start on Sept. 1 after air-conditioning use and high power use have declined, rather than on July 1 as specified in state law.

Yet, Witkoski and the utility disagree about how quickly NV Energy should recover the amount in higher rates that would be owed for power used during July and August.

If the Public Utilities Commission grants NV Energy all of the rate increase sought, NV Energy would be entitled to recover $90 million more in rates for July and August.

Assuming the commission approves the rate case as filed, the advocate wants NV Energy to collect the $90 million over the following nine months to keep interest expenses relatively low at $3.5 million.

NV Energy, however, proposes to delay collecting the $90 million for three years and then to collect the sum over the following three years. That would boost the interest expense to $51.7 million, Witkoski said.

“We believe it’s too expensive a proposal (from NV Energy), and we can do it without paying for the delay,” Witkoski said.

Yet, Witkoski likes the idea of starting the rate increase on Sept. 1 rather than July 1.

“This is a way to mitigate some of the harm on customers when use is highest in July and August,” he said.

NV Energy is asking the Public Utilities Commission to boost rates overall by 14.9 percent. But the electric company wants residential rates raised by 17.5 percent because of alleged subsidies being paid to residential customers by other classes of customers.

State law specifies that the commission must decide on the rate case by July 1. Legal experts disagree on whether the commission may allow the electric company to delay the implementation of higher rates.

Commissioner Sam Thompson, who presides over the rate case, asked participants to address the legal issue in briefs that were due Friday.

Elizabeth Elliot, associate general counsel for the utility, filed papers that argued that the commission could make the rate increase effective July 1 but not start collecting the higher rates for two months.

Kathleen Drakulich, attorney for the Southern Nevada Hotel Group, argued that the commission has no authority to delay rate changes.

Tamara Cordova, assistant staff counsel for the utilities commission, concluded that the commission could accept the decision to delay implementation of the rate increase only if NV Energy agreed to forgo recovery of the rate increase for the two months.

Rate case participants also were asked to brief Thompson on whether the commission could give low-income residents lower rates than other residential customers.

Cordova concluded that the commission could not grant reduced rates to low-income families unless the Legislature specifically approved a new rate.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.