PUC approves rate hike

Kevin Rademacher

Thursday, March 17, 2005 | 10:48 a.m.

The state Public Utilities Commission on Wednesday unanimously approved a deal that will allow Nevada Power Co. to raise residential rates by less than 1 percent.

The three-member PUC approved a stipulated agreement negotiated by the utility, PUC staff, the state Bureau of Consumer Protection and large electric customers. In total, the "deferred energy rate case" will allow Nevada Power to recover $115.9 million in past fuel and purchased power costs.

"We have before us a stipulation that I believe is not only fair but it is also significant," Don Soderberg, PUC Chairman, said. "Some of our most contentious and litigious cases in the last few years have been electric deferred energy cases."

It was the first time since 1996 that a Nevada Power case was agreed to by the parties without a protracted series of public hearings.

With the new deal, the average residential customer will see a monthly rate increase of 93 cents, from $122.33 to $123.26. That amounts to a 0.76 percent jump.

Nonresidential rates will drop by 1.71 percent. The difference between residential and nonresidential rate movement is attributed to higher peak demand for residential air conditioning during peak summer periods.

The deal would modify the Las Vegas electric company's original proposal that sought to delay the increase for a year, giving customers the opportunity for a small rate decrease on April 1 as old balances expired. That strategy, critics argued, would lead to large interest charges -- by some accounts $12 million or more -- that would ultimately be paid by customers.

Under the new plan the company would be allowed to recover its past fuel and power costs over two years beginning April 1.

Soderberg said the shortened amortization period marks the end of a dubious cycle that began during the Western energy crisis that dragged out past expenses and pushing interest costs higher.

"I believe this stipulation makes substantial progress to getting off that cycle," he said.

The chairman also said that improved calculations included in the agreement should set a more accurate rate for going-forward costs, preventing such a large deferred case in the future.

"I think it also takes a very enlightened approach to setting a realistic (base-tariff energy rate) so that we don't run up high balanced in the environment in which such high natural gas prices are having an impact on rates that consumers pay."

Fellow Commissioner Jo Ann Kelly also praised the deal for its move toward "rate stability."

"I commend them for what they did to achieve that," she said.