Plan calls for rate shifts more often

The state consumer advocate and Nevada Power Co. both support — though for different reasons — a legislative measure being considered today that calls for more frequent electric rate changes for fuel and wholesale power purchases.

State consumer advocate Eric Witkoski figures that consumers will pay less for power if rates are adjusted quarterly, rather than yearly. The quarterly adjustments would allow Nevada Power of Las Vegas and Sierra Pacific Power Co. of Reno to reduce the interest they charge customers if the utilities could recover their fuel and wholesale power costs more quickly, he said.

“I think we can save some money,” Witkoski said.

Nevada Power also backs the legislative proposal, utility spokeswoman Andrea Smith said.

“It will allow us to send a more accurate price signal to our customers,” Smith said. “It will be closer to what we’re paying (for fuel and power).”

The Senate is expected to vote on Senate Bill 437 today.

The bill directs electric utilities to adjust their rates each quarter to reflect changes in the cost of fuel used in generating power and for wholesale power purchases.

Under existing law, the utilities file make annual filings for adjustments in rates for fuel and purchased power. Add to that several months for regulatory review, and the time lag between when the energy expenses are incurred and when they are recovered through rate adjustments runs about 18 months, Witkoski said.

The time lag increases interest expenses for power users, because the utilities are allowed to charge about 9 percent interest on uncollected balances, Witkoski said.

If rate adjustments were made quarterly, subject to an annual audit by regulators, the amount of interest expenses for customers would be cut, Witkoski said.

“The savings could be quite a bit,” Witkoski said.

Interest expenses last year totaled $58 million statewide for Nevada Power and Sierra Pacific Power. The total comes to $200 million for the period of March 2001 through April 2006, Witkoski said.

The costs in the latest quarter will be averaged with the costs of fuel and power in the previous three quarters. The utility will send a notice of the rate adjustment with customer bills.

If Senate Bill 437 becomes law, Nevada Power would disclose its next rate adjustment, up or down, to compensate for changes in fuel and power prices in August. The rate change would take effect Oct. 1.