PUC signals lower NV Energy rate hike

That was the message Tuesday as hearings into NV Energy’s electric-rate case entered their last phase.

Before jumping into final testimony on the utility’s proposed allotment of rates among consumers, Commissioner Rebecca Wagner said the Public Utilities Commission of Nevada would likely grant NV Energy a smaller increase than the $250 million annual revenue jump the company asked for.

Wagner told Dilek Samil, NV Energy’s chief financial officer and treasurer, that the commission would “probably spend significant time in our order (decision) saying that just because you asked for $250 million, there certainly shouldn’t be the expectation you will get all of that.”

“My concern is that you’re asking for more than what you need, knowing you’ll get 70 percent of it,” Wagner added, noting that her number was hypothetical.

Samil responded that NV Energy is “very mindful of how people are hurting in this community,” and the company asked only for what it needs.

“This rate case is based on investments we’ve made,” Samil said. “We can’t wait until we see 500 megawatts of demand and do just-in-time building. We started these investments, and there’s not a whole lot we can do except complete these investments. They were prudently completed, so we have to ask for a return on them.”

Samil added that the utility has carefully managed operating expenses. The operations and maintenance costs it’s looking to recoup in the current rate case are flat when compared with 2008 costs.

NV Energy, whose current annual revenue is $2.2 billion, says it needs an 11.4 percent revenue increase to pay for its expanded Harry Allen power plant and higher investor returns. The utility also says it must recover the cost of consolidating its workforce and asset-management systems.

If the commission grants the utility’s request, the average monthly single-family residential bill would go from $140 to $147 on Jan. 1.

The commission seldom approves NV Energy’s entire rate request. In its 2009 general rate case, the company asked for increased revenue of $311 million, but got $218 million. In 2006, the utility sought an allowed maximum return of 11.4 percent, but got permission for 10.7 percent.

The state Bureau of Consumer Protection, which represents residential ratepayers, opposes the revenue increase. Consumer advocate Eric Witkoski says NV Energy could get by with $88 million a year in new revenue. The utility should cut employee costs by 4.4 percent, take a lower rate of return and shift cost recovery for system efficiencies and plant construction to future rate cases, he says.

Testimony also switched Tuesday to its final stage of rate design, or how NV Energy would distribute its revenue increase across commercial and residential users. Commission attorneys, consumer advocates and interveners including hospital chains, resort companies, the Southern Nevada Water Authority and Wal-Mart were on hand to cross-examine NV Energy executives.

Early questions revolved around a change in statistics NV Energy used to tabulate costs, as well as the subsidies big commercial users pay to keep single-family residential rates below cost.

Sam Crano, a commission staff attorney, asked why NV Energy filed paperwork Monday to correct data used to tally long-term transmission and distribution costs, and if the utility changed the data because it didn’t like the results.

Jeff Bohrman, a senior analyst in NV Energy’s rates and regulatory department, responded that the utility wanted to offer more information where it could.

Interveners seemed especially interested in the interclass subsidy, through which commercial users and ratepayers in multifamily homes cover some power costs for residential ratepayers. In the current rate case, the subsidy stands at $52.3 million, or 6 percent of the residential single-family revenue share. NV Energy is working to gradually phase out the subsidy so all ratepayers cover their actual power costs.

Tom Sheets, an attorney representing hospital chains, asked if NV Energy was “whittling down” the subsidy slower because of the tough economy.

Laura Walsh, NV Energy’s manager of regulatory pricing and economic analysis, said yes.

Sheets then asked Walsh whether Southern Nevada’s poor economy also affects “the businesses that are the growth engines for the economy.”

“I believe it’s affecting everyone in the community,” Walsh responded.

Rate-design testimony is scheduled to continue through Thursday or Friday. A final decision is expected in December.

To see filings in the case, visit the commission’s website at puc.nv.gov. Go to “Docket Info” on the left, click on it and select “Electric Dockets.” The rate case is Docket No. 11-06006.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-3804512.