Electricity rates could be headed down
Is any topic more confusing than power rates?
We can’t think of one. Just look at local power utility NV Energy’s newest rate filing, submitted late Tuesday to the Public Utilities Commission of Nevada and chock full of talk about DEAAs and EEPRs and EEIRs and — of course, who could forget? — BTERs and TREDs.
Hang in there; we’ll explain those rates. But here’s what you most need to know: All of those acronyms taken together mean your power bill could drop by an average of 2.7 percent sometime after the fall.
That’s because NV Energy paid less for purchased power and natural gas to operate its generating stations in late 2009 and 2010. The difference between fuel purchases and the base tariff energy rate (BTER), or the company’s anticipated revenue, accumulates over a year and results in a rate adjustment. That yearly tweaking is the deferred energy accounting adjustment (the DEAA) — and it means ratepayers could have $186.5 million in refunds headed their way, for a 2.7 percent decline in rates.
The new rates could take effect as early as Oct. 1, though the commission could delay implementation until Jan. 1 to accommodate possible legislative changes in how NV Energy accounts for deferred-energy adjustments.
"These (rate) changes reflect reductions in natural-gas prices and, equally important, the fact that the company has developed an efficient fleet of gas-fired, company-owned generating units and prudently operated that fleet for the benefit of its customers," said Jeffrey Ceccarelli, NV Energy’s corporate senior vice president of energy supply, in written testimony for the filing.
Purchased power and fuel for generating stations make up roughly half of a residential power user’s bill, and NV Energy isn’t allowed to collect profits on power expenses. The commission sets allowable investment returns during general rate cases, which cover operating expenses such as taxes, depreciation and labor costs. NV Energy will file a general rate case in June.
Eric Witkoski, the consumer advocate who represents ratepayers in utility filings, said he hadn’t seen Tuesday’s paperwork by press time. But he said he expected the documents to call for a ratepayer refund because natural-gas prices have fallen significantly in the last 12 months to 18 months. To reflect the drop-off in gas costs, rates also dropped quarterly in 2010, Witkoski noted.
"The price of natural gas has fallen and stayed at historically low prices over the last year, and at least for now, is forecasted to stay at relatively low prices, which is good for consumers," Witkoski said. "Additionally, the company has worked with the (Bureau of Consumer Protection) and the regulatory-operations staff to change its purchasing strategy to take advantage of the lower gas prices."
It’s not just natural-gas rates that are set to decline.
The temporary renewable energy development charge (TRED), which helps fund green power plants, would drop by up to 0.1 percent. Just one renewable project — the Nevada Solar One plant in Boulder City — is expected to deliver electricity to NV Energy during the rate’s effective period.
But the company also hopes to add rates (the EEPRs and EEIRs) that help it recoup costs and lost revenue related to energy-efficiency and conservation programs. It already made one filing in October to recover conservation costs; this latest filing would establish a mechanism to amortize those costs over a longer period so that consumers wouldn’t face big rate changes all at once.
The October filing asked for a rate increase of just under 5 percent that would go into effect April 1. The commission hasn’t issued a decision in the case.
Nor has the commission set hearing dates in Tuesday’s filing, because the agency must first review and accept the documents.
A spokeswoman said the commission expects to hold a consumer session sometime this summer, perhaps in July, with hearings in August or September on whether NV Energy’s power-purchasing strategies and costs were "prudent and reasonable."
Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.
