Northern Nevadans fear NV Energy plan would mean some of highest service charges in U.S.

Two groups of customers - low-income residents who limit their energy use to save money, and customers who invested tens of thousands of dollars in rooftop solar - fear they will be disproportionately harmed by a 170% increase in the monthly service charge. (Photo: Ronda Churchill/Nevada Current)

Policy, politics and progressive commentary

Northern Nevada residents voiced their opposition Tuesday to NV Energy’s proposal to increase its shareholder return by increasing the basic monthly service charge from $16.50 to $45.30, beginning Oct. 1.

The utility recently increased the monthly service charge in Southern Nevada by almost 50%, from $12.50 to $18.50.

The proposal, which is confined to the north for now, is designed to stabilize energy bills, according to the utility, which wants to increase its rate of return to investors from 9.5% to 10.4%.

The 9% increase on electricity bills would generate $96 million a year for NV Energy, according to executive Janet Wells. Gas customers would fuel an additional $12 million in revenue.

“When we were preparing this filing, we were cognizant of how challenging 2023 was for our customers,” Wells said Tuesday in Carson City. “Inflation was a nationwide issue in 2023 and NV Energy was no exception.”

Wells said by the end of the year, the average customer’s bill is projected to be 8% less than at the end of 2023, including the proposed increase in the basic service charge.

“Under the current proposal, the average monthly bill for a residential customer would drop from $119 in 2023 to $114 in 2024,” she said.

Wells cited “misinformation shared indicating that by increasing the basic service charge, certain customers like low income customers and those on fixed income will pay more and that is not the case.”

But two groups of customers – low-income residents who limit their energy use to save money, and customers who invested tens of thousands of dollars in rooftop solar – told Public Utilities Commissioner Randy Brown they will be disproportionately harmed by a 170% increase in the monthly service charge.

Lyon County resident Eric Obermayer says he saves $500 a year on electricity costs since investing in rooftop solar. That savings would be slashed while the time required to pay off his system would be tripled.

“I respectfully ask the Public Utilities Commission to reject this tone deaf, self-serving proposal,” he said..

The move is a departure from long standing utility regulatory policy that assesses energy costs based on consumption.

“You are not balancing consumer needs but sacrificing them to benefit NV Energy from my perspective,” said Dr. Sandra Koch, a Carson City obstetrician and gynecologist. “Over the past two years, you have granted NV Energy the unprecedented financial benefits of allowing a 10% profit above the costs for operations, maintenance, administration and general costs.”

Allowing profit from operating, maintenance, administration and general expenses will cost ratepayers $9.5 million, she noted.

“In a second unprecedented financial benefit to NV Energy, the PUC approved ratepayers paying for the bonuses NV Energy had paid staff,” Koch added.

Finally, she said, the PUC allowed NV Energy “to circumvent the usual process for application for new expensive projects and approved an emergency request to build a $333 million natural gas peaker plant. That’s a $33 million profit for NV Energy by granting them approval under an emergency request. And the cost is borne directly by the ratepayers.”

The proposed hike in the basic service charge, Koch said, “would make Nevada the state with the highest base rate in the nation, and will unquestionably be a financial assault on low energy users and low income families.”

NV Energy customer Thomas Komadina cited a survey indicating the average service charge among 170 investor-owned utilities is $11.66.

NV Energy “is attempting to insulate its revenue streams from growing competition with technology,” Jeff Galloway wrote in a comment submitted to the PUC.

He called the plan discriminatory, noting NV Energy is “creating two very different rates for the same service provided in Nevada.”

The proposed increase, he wrote, creates “intra-class customer inequities. Higher than average energy users get a lower than average rate increase, while low energy customers pay a higher percentage than the  average rate increase proposed.”

Galloway noted NV Energy “is a private business and thus not a state-owned entity. Yet there is clear evidence that the customers are the financiers of last resort, without the benefits of ownership.”

Galloway says offsetting energy costs via a higher service charge amounts to bundling energy costs.

“The bundling of services is typically a competitive business sales strategy. The bundle is commonly employed by cellular and cable TV providers,” he wrote.

But electricity, unlike cable TV, is a necessity, not an option.

“I just don’t believe that they should move the base rate so high. It really hurts the low-income,” said Kari Wilson, a native of Carson City. “I only have so much money. It has to stretch till I die. And the more you eat it up, if I run out I’ll have to be on the dole.”

The PUC will hold its first hearing on the proposal June 26.

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