Spending concerns raised over NV Energy’s $373M natural disaster plan

Nevada’s major gaming companies are raising concerns over the prudency of NV Energy’s proposed $373 million natural disaster protection plan.

Several utility experts filed testimony on behalf of gaming companies — and some of the state’s largest power users — that NV Energy’s natural disaster protection plan has too much spending proposed and seeks to stick Southern Nevadans with paying for the costs incurred in the northern part of the state.

NV Energy’s NDPP outlines the utility’s mitigation and response efforts related to wildfires, severe storms and other natural disaster risks in its service territory. The new plan, which would cover 2024-26, comes with a $373 million price tag, with $171.1 million allocated for capital projects and $201.9 million on operations, maintenance, administration and general spending. Of the total spending, only $76.9 million would go to NV Energy’s Southern Nevada coverage area and $296.1 million would go to Northern Nevada.

Plan to cost ratepayers more

This new three-year NDPP will be the second filed by NV Energy that could increase average monthly residential bills by between $1 and $2.50 a month depending on where a ratepayer lives, with slightly higher costs expected for Northern Nevadans, according to testimony filed by Manuel Lopez, manager of the resource and market analysis division of the Public Utilities Commission of Nevada.

Although Northern Nevada may have slightly higher NDPP costs, Southern Nevada ratepayers will contribute more to the NDPP total since over two-thirds of NV Energy customers live in the southern part of the state.

Bradley Mullins, a principal of MW Analytics, said in filed testimony on behalf of several gaming companies, including Caesars Entertainment, MGM Resorts International and Wynn Resorts Ltd., that the imbalance in spending isn’t fair to ratepayers living in Southern Nevada.

“Even if one concludes that there are some social, statewide benefits from NDPP, the benefits that (Northern Nevada) customers receive from the NDPP from the expenses that predominantly improve the assets located on their system and avoid wildfires in their locality are unquestionably higher than the benefits received by (Southern Nevada) customers,” Mullins wrote.

There is more NDPP spending in Northern Nevada since NV Energy customers are more spread out and the area has a higher wildfire risk, Jesse Murray, vice president of electric delivery and natural disaster protection at NV Energy, said.

“The overhead infrastructure that exists in Las Vegas is very small, even though it serves more people than in Northern Nevada, in which we serve a very large service territory by area, that also happens to go through a lot of wildland areas,” Murray told the Review-Journal in a previous interview.

The Public Utilities Commission has supported a NDPP from NV Energy that has Southern Nevada ratepayers cover some costs incurred in Northern Nevada.

“A natural disaster in Lake Tahoe, or Mt. Charleston, or the Las Vegas Strip impacts Nevada’s economy,” said a 2020 PUC order.

Concerns also were raised on the total spending proposed for the new NDPP as the utility still has to spend about $131 million of the over $270 million approved in the 2022-23 NDPP.

“(NV Energy) cannot demonstrate that the large spending increases of the current plan are required when such a large amount of the original NDPP budget has not been utilized,” said Mark Garrett, the president of the Garrett Consulting Group, who filed testimony on behalf of the Southern Nevada Gaming Group.

Murray, in filed testimony, stated the utility has carefully considered the costs in the NDPP and consider them worth it to mitigate or avoid a natural disaster.

“As (NV Energy considers) such costs they are done in the context of avoiding a much more fire alternative in which people, communities and property are impacted in the worst way,” Murray said. “It is only a matter of time before once more Nevada is faced with hot and dry conditions that could facilitate massive wildfires that were not possible just a decade or two ago.”

Murray also told the Review-Journal there have been some positives seen by the NDPP. The spending lessened the impact of a 50-mph wind storm in February compared with a similar storm in 2017.

“(In 2017,) we had somewhere in the neighborhood of 47,000 customers that were impacted in that (similar) wind event,” he said. “The wind storm we had (in February) had an impact of less than half of that. So we had 20,000 customers (without power) at the peak.”

A decision on the NDPP application could be issued by the PUC in late August.

Contact Sean Hemmersmeier at shemmersmeier@reviewjournal.com or on Twitter @seanhemmers34.