Nevada Power trims rate hike request

Malcolm Hall

Thursday, Jan. 10, 2002 | 10:59 a.m.

Nevada Power Co. has scaled back its general rate case request by nearly $20 million per year, saying its costs have been diluted by growth in its customer count.

The company asked the Public Utilities Commission of Nevada on Oct. 1 for permission to increase electricity rates by $42.7 million a year, its first general rate increase since 1993.

But Nevada Power last month quietly made a "certification filing" with state regulators reducing that amount to $22.9 million, said company spokeswoman Sonya Headen.

Headen said the original rate request was based on operating costs through May 2001, but that customer growth during June, July and August prompted the company to review previous figures.

"In those three months we had new customer growth -- 1 percent -- which was a little higher than we anticipated," she said. "That helped us lower the amount by spreading operating costs across a wider customer base. These are daily costs that we can control, so there are new numbers."

But the state's Bureau of Consumer Affairs believes the rate request is still too high.

Chris Van Dyck, senior deputy attorney general, said the certification filing wasn't a big surprise.

"We expected they would be certifying to a lower amount, we just didn't know how much lower," he said. "Nonetheless, despite the reduction, we think what they've asked for is significantly higher than what we think they are entitled to recover."

Van Dyck said his office continues to pour through the books and records to develop its recommendations.

"We hope to file public testimony Jan. 22 on cost of capital return on equity and on Jan. 25 will be the investments, expenses and depreciation testimony," he said.

Under existing rules, Nevada Power is required to take a two-phased approach to setting energy policy and electric rates.

The general rate case filing in December -- phase one -- was the beginning of a six-month public filing process before any rates are changed on April 1. Phase one covers the company's facility additions -- nearly $1 billion since 1993 -- and all incurred expenses, including capital costs.

Phase two is the deferred energy case that Nevada Power filed Dec. 1 asking for $921 million over three years to pay for fuel and purchased power costs incurred during the energy crisis.

Formal hearings on the general rate case are scheduled to begin Feb. 4, while hearings for the deferred energy case will start March 4.

"The certification filing is standard procedure in general rate cases that allows the company to take advantage of any increases in energy sales in order to lower the impact to customers," Headen said. "The original request we filed in October was based upon numbers through May 2001, and there are always adjustments that need to be made because of new data."

The lower general rate increase, if approved, means the typical residential customer can expect a $4 monthly increase in electric bills during the summer and about $8 more in the winter.