by Dana Gentry, Nevada Current
The average NV Energy bill for July is expected to reach $470 in Southern Nevada, up from $337 last year, and the average bill in Northern Nevada is projected at $212, up from $159 in 2022, says Nevada’s consumer advocate.
“Due to public policy costs, past legislation and high natural gas prices, these rates will continue to go up for the foreseeable future,” Consumer Advocate Ernest Figueroa testified this month before lawmakers. “Ratepayers are angry and concerned about affordability.”
The public policy costs Figueroa referenced stem primarily from a bill passed by the Nevada Legislature and signed into law by Gov. Steve Sisolak in 2021 that paves the way for Greenlink, a utility transmission line network with a cost of $2.5 billion that can be passed on to customers.
“That still has to be put into rates at some point in time,” Figueroa said in an interview.
Ratepayers are also shouldering a greater burden as more corporate and institutional customers opt out of NV Energy in favor of other energy suppliers, creating a shrinking pool of customers to share the utility’s burdens.
NV Energy was unable to quantify that impact.
‘Rate shock’
The consumer advocate’s projections for July power bills are based on current rates and average July 2021 usage for the north and south. They do not include a quarterly adjustment in rates that will go into effect July 1.
Jeff Bohrman, NV Energy’s director of regulatory pricing and economic analysis, says he doesn’t know what that adjustment will entail.
NV Energy residential customers in Southern Nevada are paying $844 more a year for electricity than in 2021 when the Legislature last met, according to an exhibit submitted to the Legislature by Figueroa. “That represents a 54.2% increase to ratepayers, many of whom are on fixed incomes.”
Northern Nevada customers are paying $561 more, an increase of 50.2%.
NV Energy has the highest electricity rate (about 15¢ per kilowatt hour in December 2022) of the Mountain and Pacific states, with the exception of California (about 26¢ per kWh). Source: Nevada Bureau of Consumer Protection; U.S. Energy Information Administration.
The utility generates 60% of its energy for Southern Nevada and 41% of its energy for Northern Nevada from natural gas, a greater share than any other state served by parent company Berkshire Hathaway Energy, which provides electricity via PacifiCorp to 2 million customers in California, Oregon, Washington, Wyoming, Idaho, and Utah.
Natural gas made up just 21% of Pacificorp’s energy portfolio in 2022. The bulk -– 43%– comes from coal.
The average annual price of wholesale natural gas for Nevada’s electricity customers has remained in the single-digits since 1997, topping out at $8.26 per thousand cubic feet in 2008.
In December 2022, “due to colder-than-normal temperatures and regional pipeline constraints,” natural gas prices at several hubs in the western U.S. spiked to more than $48 per thousand cubic feet, the U.S. Energy Information Administration reports.
The price of natural gas sold to Nevada ratepayers saw another unusually high spike in January 2023, hitting $36.81 per thousand cubic feet, up from $3.74 in January of 2021 and $7.45 in January 2022.
The costs of that January spike, as well as the utility’s gas purchases in February and March will be part of a quarterly adjustment to be filed next month, with new rates going into effect July 1. Those new rates are not included in the consumer advocate’s projections for July power bills.
NV Energy spokeswoman Katie Nannini says pipeline maintenance in the west and lower natural gas storage levels in the region exacerbated the shortage of supply.
The current wholesale price is in the $2 range, but the decline will be slow to show up in customer’s bills, thanks to a lag caused by a formula based on a 12-month rolling average of natural gas costs.
A quarterly adjustment in rates based on the cost of gas and power purchased in the fourth quarter of 2022 went into effect April 1. Customers in Northern Nevada can expect to see bills increase by 6.4%, while Southern Nevadans will see a smaller increase of 1.54%, the utility says.
In June, NV Energy will file a general rate case. Any approved increases would go into effect in January 2024.
Bohrman of NV Energy says he’s also unaware of what that case, to be filed June 5, will include.
“I don’t think rates are going to come down substantially by the end of the year,” says David Chairez, the consumer advocate’s regulatory manager. “They may not keep rising, but I think they’re going to stay high.”
Still to come, in addition to rate hike requests to cover capital costs for Greenlink, is the utility’s plan to recoup costs for building, operating and maintaining a network of electric vehicle charging stations throughout the state at a cost of $100 million to be borne by ratepayers, those with and without EVs. Ratepayers will be charged a fee based on their residential power usage.
The utility says it will spend half of its investment “in historically underserved communities,” but some suggest the plan puts low-income ratepayers in the position of subsidizing charging stations in wealthy neighborhoods.
Low-income motorists are often shut out of the EV market by prices upwards of $60,000. In California, the state with the highest percentage of EVs on the road, “electric cars are almost nonexistent in Black, Latino, low-income and rural communities,” according to a recent report.
“The price of electric cars are still outside the range of most Nevadans,” Figueroa said.
Bohrman was unable to explain the policy benefits of saddling those less likely to use the amenities with an equal share of the cost.
‘Pay the cost’
Some utilities and state governments are attempting to mitigate the high cost of energy, especially for low-income ratepayers.
In Minnesota, regulators stuck four utilities with $58 million in costs incurred during winter storms and gas supply disruptions in 2021.
California is implementing a program designed to lower utility bills for low-income ratepayers. It’s expected to face lawsuits based on equity.
“I’ve talked with those utilities,” Bohrman said. “It’s really a dangerous slope that they’re going down. It’s just creating a subsidy based on income. Some folks will be paying more of the rates than the lower income folks.”
Bohrman says similar proposals have not been considered in Nevada.
“Cost causation is our guiding principle,” he said. “Those who cause the cost should pay the cost.”
