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May 26, 2015

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NV Energy customers may get zapped for conserving

Pushing energy efficiency is affecting NV Energy’s bottom line, prompting it to seek rate hike

Beyond the Sun

The state’s electric company wants to raise power bills by as much as 5 percent for Southern Nevadans as compensation for the loss of electricity sales because customers are more power-efficient.

NV Energy said programs it funds, such as subsidizing energy-efficient light bulbs and helping customers replace old air conditioners and refrigerators, will result in a loss of $35 million in energy sales this year in Clark County. A rate increase of almost 5 percent will reimburse the utility for its loss, it has told the Nevada Public Utilities Commission.

NV Energy is asking for $7.5 million from Northern Nevada customers, a 3 percent rate increase.

The PUC is expected this month to rule on the request, which is facing opposition from the Consumer Protection Bureau, part of the attorney general’s office, as well as PUC staff.

The utility got permission to seek such rate increases in a bill it pushed during the 2009 Legislature that passed easily.

Some economic development experts worry high energy prices will hurt the state’s competitiveness.

Nevada has the highest power rates of any mountain state, Nevada Consumer Advocate Eric Witkoski said. “The company pushed to build power that we don’t need, energy-efficiency programs we don’t need. It’s not a pretty picture for the customer.”

NV Energy said it needs to recoup its costs to promote energy efficiency, or it would have no incentive to do so.

“There’s a cost to investing in energy efficiency,” said John Owens, director of customer renewable generation and energy. A ratepayer will benefit from energy efficiency because that investment could delay the need for new power plants, he said. Also, Owens noted, individuals could use less energy to save money and offset any rate increase.

“All customers benefit from total investments that utilities have made to serve them,” Owens said. “The fact that the rate is a little higher because overall sales are lower doesn’t mean they’re not getting the full benefit of the investment.”

The public-policy debate over whether a utility should be allowed to increase rates because it is not selling all the electricity that it can because of energy conservation by customers is playing out in several states. Among the issues is identifying whether electricity sales are down because of conservation or because of a sour economy.

“We are arguing about what a light bulb saves or doesn’t save; how many light bulbs people put in or not,” Witkoski said. “Are the lost sales because of energy efficiency or because the economy went down?”

NV Energy reported last week that its first-quarter 2011 net income of $2.3 million, compared with a consolidated net loss of $1.7 million, or 1 cent per share diluted, for the same period in 2010.

NV Energy had the ability to recover costs for its programs, making its usual 10 percent profit over costs plus another 5 percent because it was an efficiency program.

But the utility argued that measurement didn’t consider the long-term effect on usage. The programs lead to customers using less energy, which hurt the utility’s bottom line.

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