New NV Energy fee a subsidy for Northern Nevada, critics say

NV Energy customers across the state may begin paying the same usage fee to fund a multimillion-dollar natural disaster protection plan, a move that a consumer advocacy group and the state’s largest gaming companies warn represents a subsidy from Southern to Northern Nevada.

The Public Utilities Commission, which regulates the power company, gave the plan a thumbs-up last month and will vote Wednesday on whether the company can charge the same fee to customers in Southern and Northern Nevada to pay for the plan.

NV Energy contends that its proposed fee represents a fair way for Nevadans to share the cost of an infrastructure plan that could cost up to $240 million by 2023 and benefits the entire state. But opponents say the fee, calculated by power usage, effectively subsidizes energy users in the much less densely populated northern part of the state.

The fee will appear on customers’ energy bills starting Thursday, and if approved, the statewide usage charge would amount to $.000025 per kilowatt-hour.

One economy

NV Energy has argued in commission filings that the statewide usage fee would share up to $8.6 million in equipment costs, inspections, vegetation management and other safeguards incurred in 2019 under a natural disaster plan required by Senate Bill 329, which was signed into law last year.

The law requires NV Energy to protect its infrastructure and prevent power loss from wildfires, earthquakes or other calamities, as happened in California during the 2018 Camp Fire that killed 85 people and devastated the town of Paradise in the Sierra Nevada foothills.

NV Energy is the holding company for Sierra Pacific Power in Northern Nevada and Nevada Power in Southern Nevada, which each operate as separate utility companies.

However, NV Energy says the disaster plan benefits the whole state and therefore the whole state should pay the same fee. The commission agreed in its approval, saying the plan prevents disproportionate costs for one set of customers.

“A natural disaster in Lake Tahoe, or Mt. Charleston, or the Las Vegas Strip impacts Nevada’s economy,” the commission wrote.

The three-person commission voted 2-0 on Aug. 17 to preliminarily approve the plan, with Las Vegas resident Tammy Cordova abstaining from the vote. Cordova was previously a member of the Regulatory Operations Staff, which expressed opposition to the plan. Gov. Steve Sisolak appointed her to the commission in June.

The two commissioners who approved that plan, C.J. Manthe and Chairwoman Hayley Williamson, each of Northern Nevada, will again vote Wednesday.

NV Energy argued in filings with the commission that there is nothing in the disaster plan legislation or state law that prevents the company from “socializing” the costs.

Last year’s law requiring the disaster plan, SB329, “statutorily mandate(s)” that the entire state pays the same usage fee to cover its costs, the commission said.

Three Nevada Democrats who supported the law attached their names to a letter of support for NV Energy’s disaster plan.

‘Unlawful’

Protection improvements last year cost about $489,000 in Southern Nevada and $8.1 million in Northern Nevada, according to the Bureau of Consumer Protection. Yet Southern Nevadans would pay about 69 percent of the total costs under a single fee, amounting to a $5.4 million subsidy from South to North, the bureau argued in a June 16 commission filing.

“The service, facilities and customers for the two electric utilities are separate,” regulatory manager David Chairez wrote on behalf of the bureau. He described a statewide fee as “unjust,” “unreasonable” and “unlawful.”

The commission’s independent branch that provides recommendations to the commission, its regulatory operations staff, also harbored reservations. NV Energy hasn’t previously charged all its customers as a single group based solely off usage, staff senior financial analyst Charles Whitman argued in filings, adding that the Northern Nevada expenses were higher because the land is more susceptible to wildfires.

The Nevada attorney general’s Bureau of Consumer Protection, the Nevada Resort Association and all six of the largest gaming companies in Nevada jumped in after the plan was approved to voice their opposition and ask the commission to rethink what they also called an “unlawful” decision.

“Such a substantial shift from established agency policy that charges (Southern Nevada’s) customers with costs incurred in and for the benefit of (Northern Nevada’s) territory is not a rule that can lawfully be established in a contested case,” reads a late petition for intervention filed by Caesars Entertainment Inc.

Legal representatives for the gaming companies did not provide comment.

Contact Mike Shoro at mshoro@reviewjournal.com or 702-387-5290. Follow @mike_shoro on Twitter.