(Photo: Ronda Churchill/Nevada Current)
NV Energy is asking state regulators to approve a revenue increase of $215.7 million that could hike residential electricity rates by 9% in Southern Nevada. It’s also asking to increase shareholder return on equity from 9.5% to 10.25%; level the playing field between rooftop solar and conventional ratepayers; and save low-income Southern Nevadans about $20 a month by eliminating their basic service charge, which would be subsidized by other ratepayers.
The utility is seeking the increase to help recover the costs of “important investments made prior to the hottest summer on record to ensure long-term affordability, reliability and sustainability of electric services in Nevada,” says a news release from NV Energy. “These upgrades were crucial in meeting customer energy demand during last summer’s record-breaking heatwave.”
The upgrades to capital projects include Silverhawk, a natural gas plant designed to produce electricity during peak consumption periods, the Reid Gardner battery storage project, and the Greenlink transmission project.
Greenlink’s cost has ballooned from just under $2.5 billion to more than $4.2 billion, and could increase even more, should Pres. Donald Trump impose tariffs on Mexico. NV Energy is “determining the cost impact of potential tariffs on imports from Mexico” and has “executed several procurement contracts to import long lead time materials” from Mexico, according to testimony filed with the Public Utilities Commission of Nevada.
The utility is also seeking to prematurely recoup the cost of constructing Greenlink, to generate cash flow during construction and help maintain credit ratings, executives said in testimony. If approved, the average residential customer would pay $3.57 more each month for construction in progress at Greenlink.
In 2021, NV Energy CEO Doug Cannon told state lawmakers that “Nevadans will not be asked to pay for this investment until at least five to six years down the road.”
Despite Cannon’s assertion, the utility sought state approval last year in its Integrated Resource Plan (IRP) to add the cost of construction of Greenlink to electric rates before the project is completed, which is usually not permitted because it requires customers to pay for a service not yet provided.
The PUC ruled in December the financial impact of adding the costs of construction work in progress (CWIP) can only be determined in a general rate case, not in an IRP, and criticized the company for its about-face, questioning “how NV Energy could make certain statements to the Legislature in May of 2021,” and the following year seek permission from federal regulators to charge ratepayers for CWIP.
“The company is faced with meeting the demands of growth, addressing system reliability, resource adequacy, legislative goals and mandates, and operational needs as it relates to sufficient levels of staffing, technology, and insurance – all of which necessitates investments above those currently reflected in the existing revenue requirement,” NV Energy vice president and chief financial officer Mike Behrens said in testimony submitted to the Public Utilities Commission justifying the utility’s rate requests.
The hike is needed to provide “customers with a diverse energy generation portfolio, but to also enhance resource adequacy, increase grid hardening for sustained reliability, replace aging system components, and reduce wildfire risk.”
Relief for low-income residents
NV Energy is proposing to eliminate the $18.50 monthly service charge in order to help make ends meet for low-income residential customers (those earning no more than 150% of the federal poverty level).
An estimated 154,827 households in Southern Nevada would qualify, according to testimony from NV Energy.
The program, which would take effect in April of 2026, is expected to cost $9.5 million a year with the participation of 30% of eligible customers and $30 million with 100% participation.
At 30% participation, the average non-participating residential customer would pay an additional 42 cents a month to subsidize the program. However, the utility is proposing to defer the costs of the subsidy and charge interest, which would cost ratepayers more in the long run.
Peak demand charge
NV Energy says its basic service charge of $18.50 for Southern Nevada customers is inadequate, but given its unsuccessful effort last year to triple the service charge in Northern Nevada to $45, the utility is proposing a demand charge rate for residential and small commercial customers in the south.
Demand charges are designed to reduce the strain customers put on the grid at late afternoon and early evening hours.
“By turning more appliances on at a single point in time, a customer will be putting a greater strain on the electrical grid than they would if they were turning on only one appliance at a time,” testified Jeffrey Bohrman, director of Regulatory Pricing and Economic Analysis for NV Energy.
The utility says the demand charges allow it to more accurately price its services, while offering consumers flexibility in controlling their use.
The charge will also help NV Energy lessen the burden on full-service customers who subsidize costs for those with solar panels. Rooftop solar customers, by law, are charged rates “far below cost-based levels,” Bohrman testified.
If approved, demand charges would go into effect April 1, 2026.
Rooftop solar would cost more
NV Energy is also proposing to change the net metering formula for rooftop solar customers whose systems were installed after June 15, 2017. Instead of calculating excess energy returned to the grid monthly, the utility is proposing to net excess energy every 15 minutes.
The change is expected to increase monthly bills for rooftop solar customers by about $11 a month, and would affect customers who apply for net metering after Oct. 1 of this year.
The proposal is expected to be opposed by rooftop solar companies.
“NV Energy remains committed to supporting customers who make the choice to utilize a solar resource at their homes – without negatively impacting non-solar customers,” the company said in a news release. The proposal would go into effect on Oct. 1, if approved by the PUC.