Home electricity rates rising
The price of keeping the air conditioners running and the lights on will increase about $24.70 monthly this summer in Southern Nevada because of an estimated 11.5 percent power rate increase approved Wednesday.
The Public Utilities Commission voted 3-0 to boost the typical single-family residential customer’s summer monthly bill to $239.48 for 2,000 kilowatt hours, starting June 1.
In an average month, a typical residential customer will pay $15.70 more, or a total of $152.19 for 1,250 kilowatt hours.
The overall percentage increase for all classes of customers is 5.2 percent, according to Nevada Power estimates.
“The rates are higher than they have ever been” because of the rate increase, state consumer advocate Eric Witkoski said.
Michael Yackira, president of Nevada Power Co. parent Sierra Pacific Resources, defended the general rate case increase as justified based on money the utility has spent on power lines and new, efficient power plants.
“The company since the last rate case has invested more than $1.3 billion … in infrastructure and generation, and the generation portion is more than 50 percent of the $1.3 billion,” Yackira said.
The Chuck Lenzie Generating Station, Harry Allen Generating Station and Silverhawk Power Station saved consumers more than $100 million because they are more efficient than older power plants, he said.
“This rate case is principally a result of those investments we made that have already saved our customers money,” Yackira said.
The commission approved an 11.5 percent rate increase, although the utility was requesting a 15 percent residential rate increase.
The increase covers Nevada Power’s general expenses and profits, energy and purchased power costs, settlement of disputes over a 2002 rate case, and payments Nevada Power made to compensate wholesale power suppliers for contract terminations in 2002.
A major portion of the rate increase is being implemented because the commission determined that nonresidential customers were subsidizing residential customer rates by $97 million yearly.
The commission added 5 percentage points to a 6.5 percent increase to lower the subsidy to $61 million.
But Commissioner Jo Ann Kelly urged her associates to raise residential rates more than 5 percentage points and take a bigger bite out of the growing subsidy, which dates back 25 years.
“The level of the subsidy and the length of time the subsidy has gone on is insidious economically,” Kelly said.
She said large commercial customers might someday win approval to exit the regulated utility system, leaving remaining customers with higher costs.
Another commissioner disagreed.
“I have a really hard time putting any more burden on residential ratepayers,” Commissioner Rebecca Wagner said. But she wanted to “whittle away on the subsidy.”
Commission Chairman Don Soderberg said it’s the wrong time to shift the rate burden to residential customers.
Nevada’s largest companies are enjoying record profits and have benefited from a sharp increase in Strip property prices in recent years, Soderberg said. Yet, many consumers are struggling with higher gasoline prices, bigger energy bills and rising mortgage payments, he said.
“We lead the nation in home foreclosures,” Soderberg said.
Witkoski said big commercial customers can more easily pay higher rates.
“The residential customers don’t have a way to pass these utility costs,” unlike businesses that can raise their prices, he said.
Wagner voted with the majority on most of the rate case decision but dissented on the maximum amount of profit Nevada Power can earn.
Wagner proposed authorizing Nevada Power to make a maximum 10.6 percent return on equity, a measure of profitability, up from 10.25 percent currently.
Kelly favored 10.75 percent, and Soderberg won Kelly’s support for a 10.7 percent return on equity.
The commission decided to let the utility charge customers for 65 percent of the cost of executive incentives and pension programs, a small but controversial part of the overall increase.
The regulatory body disallowed $3.8 million for legal fees associated with lawsuits over termination of power supply contracts with Enron Corp. and other companies. The commission said Nevada Power already settled the amount of legal fees it would recover from customers.
