Nevada regulators have approved a rate cut for customers of Nevada Power Co. even as rooftop solar installations surged in response to a 2017 overhaul of net energy metering rules and the state accelerated the closure of its coal plants. They also authorized a new profit-sharing plan to assure customers get a cut of any earnings boost flowing to the NV Energy Inc. utility from recently enacted federal tax reform, a possible nationwide trend among energy regulators.
In a Dec. 29 general rate case decision that top energy regulator Joe Reynolds called "historic," the three-member Public Utilities Commission of Nevada unanimously approved an order to reduce Nevada Power's fixed monthly basic service charge for single-family residential customers to $12.50, from a current rate of $12.75, and to give other customers similar relief, while spreading roughly $30 million slashed from the utility's revenue request across all residential and commercial customers to reduce power consumption charges.
The cuts are expected to decrease electric bills for the average residential family by up to 2%. "This is modest, but I do believe this is historic," Reynolds, the commission's chairman, said in a meeting before the vote. It is the first rate reduction of its kind in Nevada in more than 30 years, according to the regulator.
"I think it's important to note this decrease is coming while we are doing something historic with respect to net energy metering," he added, pointing to rooftop solar installations proceeding at record pace for the state. In the order, the regulator rejected proposed fixed rates that renewable energy advocates feared could have hurt solar system buyers and maintained current time-of-use rates. The commission said it would ensure any new time-of-use rates it approves enhance the growth of rooftop solar and "encourage electric battery storage."
Sharing the benefits of tax reform
For the next three years, Nevada regulators approved a 9.4% return on equity, down from a current 9.8%. In addition, regulators established a new profit-sharing requirement "to capture overearnings" that could flow to NV Energy, a unit of Berkshire Hathaway Energy, from the federal government's corporate tax cut. Any equity returns received by Nevada Power beyond 9.7% "shall thereafter be split equally" between the utility and its customers, the order said.
"This is done as a backstop measure ... to rein in any overearnings that may occur," Reynolds said, pointing to the possibility for NV Energy to save money by refinancing debt at a lower rate in 2018 and 2019. "Other commissions across the United States ... are also looking at imposing similar earnings-sharing mechanisms on their respective utilities that they regulate." (Nevada PUC Docket Nos. 17-06003 and 17-06004)