Few respond to utility’s request to increase rates

Alana Roberts

Monday, Feb. 21, 2005 | 10:35 a.m.

Only three Nevada Power Co. customers spoke during a morning consumer session Friday of the Public Utilities Commission to allow consumers to express their opinions about the utility's $115.9 million rate increase request.

Two consumers who spoke didn't directly address the rate increase during the session. However, David Shakespear, a Las Vegas resident, commended the Bureau of Consumer Protection's stance on the company's rate increase. The Bureau of Consumer Protection objects to the company's request to delay the increase until April 2006.

"It seems I'm already represented by the Bureau of Consumer Protection," Shakespear said. "I don't want the power company to be putting the screws on us so they can go party."

The PUC held two consumer sessions Friday about the rate increase request, one at 10 a.m. at the Winchester Community Center and another at 2:30 p.m. at Sahara West Public Library. The morning session was sparsely attended with fewer than a dozen attendees and even fewer attended the afternoon session, Rebecca Wagner, public information officer of the PUC, said.

Company leaders argue that delaying collection of the increase until April 2006 will keep costs to consumers stable in the wake of increasing fuel prices. The company would recover the balance over 22 months. That means that during the yearlong delay, a portion of the $115.9 million -- about $40 million -- will accrue interest, which also will be paid by customers.

Interest will accrue at a rate based on the company's overall rate of return, which was set by the PUC at 9.03 percent. Michael Yackira, chief financial officer for Nevada Power's parent company, Sierra Pacific Resources, has said that the actual interest rate applied will be about 8.5 percent, based on calculation anomalies.

Roberto Denis, senior vice president of generation and energy supply at Nevada Power Co., said during the session before consumers spoke that the delay will help stabilize utility costs for customers.

"We're proposing to delay implementation of the current filing until (April) 2006," Denis said. "We think this is in the interest of customers."

The attorney general's Bureau of Consumer Protection has argued that the yearlong delay would cost consumers more than $12 million in interest.

"If you go with the delay you're going to increase costs considerably because the carrying costs get passed on to rate payers each year," Eric Witkoski, senior deputy attorney general who did not speak during the session, said. "This would add costs; it's pay me some now or pay me more later."

In its rate case request, which incorporates an earlier petition the company made with the PUC, Nevada Power asked to have an old rate case balance extended from January to March. At that point, the old balance would expire and be replaced with another previously approved, but smaller, balance, providing a 1 to 2 percent rate decrease for all customer classes on April 1.

That would reduce average residential monthly bills from $122.33 to $121.18 until the newly requested balance is instituted in April 2006.

Included in those rates is a requested $85 million increase in the base-tariff energy rate which is designed to cover future costs for fuel and power needed to serve customers. If that rate is set accurately, it would mean little or no need to collect additional revenue next year.

The company filed testimony Wednesday that said if the plan to delay recovery of the $115.9 million is rejected by regulators, and recovery begins in April 2005, residential rates are expected to jump 7.56 percent. Nonresidential customers would see rates jump by 9.02 percent.

Hearings on the rate increase request are set to begin Wednesday at 10 a.m. at the PUC offices in Carson City. They will be broadcast live through video feed at the PUC's Las Vegas office, 101 Convention Center Drive, Suite 250. We think this is in the interest of customers.