Utility measures face scrutiny

Kevin Rademacher

Monday, April 11, 2005 | 10:45 a.m.

A pair of utility-related bills on Friday faced difficult questions in debates before the Nevada Senate Committee on Labor and Commerce.

Attempts had been made to amend Senate Bill 256, which is designed to streamline workflow for the state Public Utilities Commission, to contain a provision that would ensure residential customers a portion of any future electric rate decreases.

"The policy behind this is to safeguard the ability of small customers to share in any rate decrease," said Consumer Advocate Adriana Escobar Chanos, who supported the amendment.

PUC Chairman Don Soderberg, however, said that keeping the original language of the bill, which carried no such provisions, would allow the commission to continue to work toward reducing the so-called "residential subsidy." That subsidy currently has commercial ratepayers paying millions of dollars in extra rates to artificially lower residential rates.

The annual cost of that subsidy to commercial ratepayers has been estimated at between $20 million and $100 million a year.

The committee ultimately voted to drop the amendment. Sen. Randolph Townsend, R-Reno, said including the amendment would be asking lawmakers to take up rate-design issues better suited for the PUC.

"Why should the Legislature decide it?" asked Townsend, chairman of the Commerce and Labor Committee. "This is a hugely technical issue. I think you may be asking just a little too much of the Legislature."

Also debated Friday was Senate bill 238, which would give Southwest Gas Corp. of Las Vegas the ability to make monthly adjustments to its rates in order to keep up with the rising natural gas market.

A revised plan that would allow the natural gas distribution company to make quarterly adjustments received support from the committee after a compromise was reached between the utility, the Consumer Advocate and PUC staff. In that deal, Southwest Gas' quarterly adjustments would be reviewed for prudency by the PUC, and the utility also would continue to submit its annual natural gas purchase plan to the commission for review.

Ernest Figueroa, deputy attorney general for the Consumer Advocate's Bureau of Consumer Protection, said more frequent adjustments would minimize interest charges that build up when the utility under collects. Those charges are ultimately paid by consumers.

"That carrying cost is substantial when dealing with millions of dollars," he said.

The bill, however, was stalled when Escobar Chanos challenged a provision that would have allowed Southwest Gas to use a future test year to set its current rates. She was joined in her protest by former Consumer Advocate Fred Schmidt, now a Carson City-based attorney specializing in utility issues.

"While it's sort of an interesting concept, we in Nevada have not researched this sufficiently," Escobar Chanos said.

The issue is scheduled for further debate Tuesday.