Rule change reduces interest Nevada Power charges customers
The state’s top utilities regulator on Wednesday pushed through a rule change that trims the interest that Nevada Power Co. charges customers through rates for unrecovered fuel and wholesale power expenditures.
But state consumer advocate Eric Witkoski said Public Utilities Commission Chairwoman Jo Ann Kelly did not lower the interest rate enough.
The new interest rate is about double the interest rates other state regulators allow electric utilities to charge customers, Witkoski said.
The size of the last energy rate increase this year would have been $2.2 million smaller had the new rule been in place, said Kristy Wahl, a commission spokeswoman. If the rule had been in place for the energy rate change, the typical residential customer would have saved 21 cents a month or $2.52 a year, the utilities commission said.
The rule applies also to Sierra Pacific Power Co. and Southwest Gas Corp., but the savings and interest rates for those utilities are different.
Kelly, who became the commission’s chairwoman this month, said she believed that Nevada Power should get a lower interest rate or so-called carrying charge on unrecovered fuel and wholesale power expenses.
The chairwoman, however, disagreed with Witkoski’s argument that the interest rate should be the same as short-term interest rates paid in the competitive market.
Instead, Kelly called for lowering the rate to 7.66 percent from 9.06 percent for Nevada Power. The two other commissioners voted for her proposal.
“They’re headed in the right direction, that’s lower,” Witkoski said. “But we still feel it’s a little too high.”
Electric utility rates factor in a 5.125 percent interest charge for unrecovered fuel and power expenses in California, Witkoski said.
Arizona is charging 4.8 percent. Florida charges 5.125 percent, he said.
Witkoski said utilities, such as Nevada Power, are not supposed to earn a profit on interest rates applied to unpaid balances for fuel and power.
Nevada Power only pays 4.86 percent on deposits that customers are required to make with the company to get power, Witkoski said.
In proposing the change the rules, Kelly said the change in interest rates would not make a big difference in electric bills, but she said it would help.
The rule change was temporary, but Kelly suggested the commission could later make the rule change permanent.