NV Energy rates expected to dip Oct. 1 but would bounce back up Jan. 1

Your power rates could drop soon, but it may be a short break.

The Public Utilities Commission of Nevada has issued a preliminary order approving an NV Energy rate plan that would cut single-family residential electric rates by 4.3 percent, to an annual average of $140 a month, beginning Oct. 1.

The decline comes courtesy of falling prices for natural gas, which the local power utility buys to run its generating stations. The law requires NV Energy to pass increases or decreases in fuel costs directly on to consumers.

There’s a catch, though.

State law also requires NV Energy to file a general rate case every three years to cover operational costs. The utility filed its latest general rate case in June, with rates to take effect Jan. 1. If the commission grants NV Energy’s general rate request, rates would increase back roughly to where they are today.

In its June general rate case filing, NV Energy asked for $246 million a year in increased revenue on its current $2.2 billion annual revenue base to cover power-plant construction costs and return on equity.

The utility wants the commission to boost its allowable return for investors from 10.5 percent to 11.5 percent, though returns typically fall below ceilings the commission sets. NV Energy’s returns actually run around 7 percent.

By itself, the general rate case would bump up power bills by 11.5 percent.

But NV Energy asked the commission to defer the Oct. 1 fuel-related rate decline to Jan. 1, to help offset the general rate increase. Combined with delaying a chunk of the revenue request until the next general rate case in 2014, holding the fuel-cost decrease until January would keep bills at their current $146 a month annual average, rather than see them decline in October and jump back up in January. NV Energy would continue to credit customer accounts for fuel-cost declines until the new rates kick in. The idea? To avoid confusing instability in power rates from October to January.

The state Bureau of Consumer Protection argued against NV Energy’s idea, noting that combining the two rate cases for no effect on rates would “mislead customers by masking, or diluting, the price signals that result from rate increases.” Plus, ratepayers who leave the market from October to January wouldn’t receive a refund due to them, while new residents would get refunds they didn’t help generate.

In her preliminary order, Commissioner Rebecca Wagner said the agency had no compelling reason to delay the October rate drop.

The commission will decide on Wagner’s order Wednesday.

Hearings involving NV Energy’s general rate case are scheduled to begin the first week of October. Consumer sessions are scheduled for Oct. 11 at Cashman Convention Center at 1 p.m. and 6 p.m.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.