Public session set on power rate hike plan

Kevin Rademacher

Friday, Sept. 2, 2005 | 11:05 a.m.

Consumers will get a chance on Tuesday to tell state regulators, utility officials and attorneys for the Bureau of Consumer Protection what they think of Nevada Power Co.'s request for a rate increase of nearly $10 a month.

The session will begin at 2 p.m. at the Sahara West Library, 9600 W. Sahara Ave., and it has the unique distinction of coming a week after hearings were held before PUC Chairman Don Soderberg.

Both the results of the hearing and the feedback received from consumers will be entered into the record of the case and be used when the three-member commission decides the case.

In the wake of rising natural gas prices, Nevada Power Co. could need as much as $147 million in rate increases to cover higher costs.

In its June rate case filing, Nevada Power said it needed $62 million in additional revenue to cover the cost of natural gas which is used to fuel power plants. Subsequent testimony filed by PUC Financial Analyst David Chairez said that price increases since the original filing meant that the $62 million request was $84.8 million short.

That would push the total rate increase to nearly $147 million.

In rebuttal testimony, Nevada Power indicated that -- after mitigation efforts such as hedging activity and the acquisition of more efficient power plants -- the company needed about $133 million in rate increases.

If either one of the higher rate increases is approved, the average residential customer could face monthly bill increases of nearly $10, or about 8 percent.

At last week's hearing, Chairez was questioned about the legality of PUC staff making updates to a utility's request. Ernest Figueroa, a deputy attorney general for the state Bureau of Consumer Protection, asked Chairez if regulations allowed for such a move. Chairez responded that he did not know of any specific prohibitions against such a move.

Alaina Burtenshaw, staff counsel for the PUC, also pointed out that the commission is charged with setting "just and reasonable rates." She asked Chairez if he thought setting rates so low that they accrue "tens of millions of dollars" in carrying charges and interest would be just and reasonable. He responded that it would not.

Carrying charges are ultimately paid for by consumers.

Figueroa also asked Patricia Franklin, a Nevada Power regulatory revenue expert, if she was aware of the concept of "rate shock." Franklin described it as rate increases so high that consumers are unable to respond, resulting in drastic declines in usage.

On further questioning, however, Franklin indicated that the alternative is not much better.

"You can either recover currently or you can defer it and have rate shock later," she said, adding that it is important to send an accurate signal to customer as to the true price of the commodity they are using. "I think it is important that the people that cause the cost pay for the cost."

New rates resulting from the case are expected to go into effect Oct. 1.