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June 30, 2015

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PUC staff agrees NV Energy should refund $14.6 million to customers

In an unprecedented move, two state agencies are arguing that NV Energy should refund its customers a total of about $14.6 million.

The state’s Bureau of Consumer Protection and staff at the Public Utilities Commission of Nevada say the utility basically earned too much money last year, so it should give some of it back to you, the ratepayer.

Both agencies filed testimony Wednesday arguing the company should refund the money.

The regulated monopoly has what’s called an authorized rate of return, but it’s possible it could earn a profit beyond what’s allowed by the PUC.

Last year, when the company reported $322 million in record profits, it also collected $14.6 million in energy efficiency charges.

That’s the money the utility charges to recoup what it loses as its customers implement efficiency measures — such as better light bulbs or appliances — to curb their consumption.

The law allows the company to get so-called “lost sales compensation” for energy its customers don’t use under the premise that it needs the money to maintain its power infrastructure.

“There is much customer frustration at having to provide artificial compensation to utilities for services that are not provided,” wrote Dan Jacobsen with the Attorney General’s Bureau of Consumer Protection. “Customers would be very frustrated if the company were allowed to retain lost sales compensation based on the company’s desire to have even higher profits than authorized.”

Jacobsen argues that Nevada’s customers shouldn’t have had to pay lost sales compensation in 2012 because the company had record profits; whatever it didn’t collect because of customers’ energy-efficiency upgrades, it collected by other means to the extent that it earned more than the commission said it could.

Jacobsen is in effect asking: What lost sales?

“When the company earns more than its authorized rate of return for a certain year, then it has recovered all of its operating costs, the return of investment, and more than its authorized rate of return,” he wrote in his testimony.

Refunds for typical residential customers could be about $7.

The three-member Public Utilities Commission will decide whether to agree with Jacobsen. While NV Energy makes quarterly adjustments that sometimes result in customers receiving a credit on their next bill, the commission has never dealt with a refund case of this magnitude, Jacobsen said.

The commission’s own staff has already sided with the Bureau of Consumer Protection, arguing in testimony filed Wednesday that customers should get the refund.

Commission staff argue that the state law allowing for lost sales compensation specifically says that such compensation must not “authorize the electric utility to earn more than the rate of return authorized by the commission.”

NV Energy did earn more than the rate of return authorized by the Public Utilities Commission. The company said so itself in March.

Commission staff wrote that the meaning of the law “appears to be obvious.”

The company will likely say that the situation is not so clear cut. A spokesman for the company said the utility never comments on matters before the Public Utilities Commission.

But the company will have a chance to issue a rebuttal to the Bureau of Consumer Protection on July 31. Then a utilities commission officer will listen to both sides during an Aug. 7 hearing and make a recommendation to the full commission.

After that, the commission will decide whether to adopt, reject or modify the refund proposal.

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