Electric bills could rise by about $5 a month

Kevin Rademacher

Friday, June 3, 2005 | 11:06 a.m.

Nevada Power Co. this morning said it has asked the state Public Utilities Commission for permission to raise the so-called base tariff energy rate to cover higher costs for natural gas needed to operate power plants.

If approved, the increase would raise the average residential customer's monthly electric bill by about 3.8 percent, or $4.86, to more than $128.

Nonresidential rates would increase about 3.5 percent. The difference between residential and nonresidential rate movement is attributed to higher peak demand for residential air conditioning during the hottest summer months.

The company is seeking to put the proposed rates in effect Oct. 1.

In 2004, the PUC passed new regulations mandating that the utility reset its base-tariff rate if prices rise or fall to avoid large unrecovered balances that are eventually paid by customers with interest.

The filing also "sends the right price signals to our customers," said Michael Yackira, chief financial officer for the Las Vegas utility's parent company, Sierra Pacific Resources, adding that strong conservation efforts reduce the company's need to buy more natural gas to fuel its power plants, and, ultimately, build fewer plants.

Adriana Escobar Chanos, Nevada's consumer advocate and head of the Bureau of Consumer Protection, said the timing of the increase could ultimately save consumers money.

"On the one hand, we are disappointed that there may be a need for a rate increase," she said. "However, by having a midyear adjustment it should help alleviate a growing problem and reduce carrying charges."

Escobar Chanos also promised a full review of the request.

"With respect to the amount requested, the Bureau of Consumer Protection will be investigating thoroughly and make sure that the amount is prudent," she said.

Amid turbulent natural gas markets, Nevada Power also has received permission from the PUC to study the feasibility of building a new coal-fired power plant. Such plants fell out of favor due to pollution concerns, but industry experts now point to cleaner technology as an alternative amid higher natural gas prices.

The company is expected to update the commission in the next few weeks on its progress in researching coal options, Yackira said.

Utility and state officials also continue to pursue additional use of renewable energy resources, such as solar and wind power.

Nevada Power executives noted that the company makes no profit on the base-tariff rate. The company can make profit on its general rate component, which includes charges for power distribution and other items. Costs for fuel and power acquired on the open market are passed through to customers on a dollar-for-dollar basis, as mandated by state regulations.

In March, the PUC allowed Nevada Power to recover $115.9 million in past fuel and purchased power costs. That deal raised the average residential customer's monthly bills by 93 cents, from $122.33 to $123.26. That amounts to a 0.76 percent jump.

Nonresidential rates were cut by 1.71 percent.

Those rates went into effect April 1.