Boulder City, NV Energy in dispute over power charges

By Dylan Scott

Saturday, Oct. 2, 2010 | 2:05 a.m.

As they try to resolve a dispute over hiked rates, Boulder City and NV Energy are engaged in on-going contract negotiations over the company’s share of the city’s power purchases.

Rory Dwyer, city’s utility administrator, told the Sun he couldn’t discuss specifics of the negotiations. However, the contention results from NV Energy raising rates twice in the last two years. Boulder City residents and businesses paid those increased costs to the city, which purchases and then distributes its own power, when rates jumped 35 percent at the beginning of this year.

In October 2009, NV Energy increased both energy and capacity charges by almost 150 percent. Then in June 2010, the company dropped the energy charge by about 15 percent, but raised the capacity rate again by 18 percent.

And therein lies the problem, said Dwyer, who updated the city council on the negotiations at its meeting on Tuesday.

Energy rates charge customers for actual usage. Capacity rates, however, charge customers based on their peak usage -- as a reserve, in layman’s terms, for unexpectedly high use.

Coming out of the summer months, Boulder City will use less actual power, Dwyer said, but the capacity charges will stay the same. In that case, the city pays more.

NV Energy supplies only a small segment, 2.3 percent, of the city’s energy, although it provided more than 40 percent before the rate hike in 2009.

More than half of the city’s power has come from Hoover Dam since 1960, and NV Energy stocked the rest until rates jumped last year. Boulder City then sought other sources, called “market purchases”, from out-of-state companies through two government agencies, the Colorado River Commission and the Western Power Administration, which manage hydropower resources, Dwyer said. Those now account for about 43 percent of the city’s energy.

The two parties disagree on how much electricity Boulder City is contractually allowed to purchase from market sources, Dwyer said. A spokesperson for NV Energy declined to comment on the negotiations, saying only that the company hopes to resolve the issue.

A bigger share for other companies, it stands to reason, would result in less revenue for NV Energy.

To complicate the matter, NV Energy’s share of the city’s power might be small, but it’s important, Dwyer said. It covers unexpected surges in usage, so the whole city doesn’t go black when power use is high. The market sources can’t replace that role, he said.

The council asked Dwyer about the solar panel facilities that surround the city in Eldorado Valley, but he said solar power still costs far more than NV Energy charges.

Because Boulder City preemptively raised its rates for residents and businesses, Dwyer said he doesn’t anticipate another rate increase for customers regardless of the outcome.

However, if NV Energy wrestles away a bigger slice of the city’s power, funds might have to be funneled from the Utility Department’s reserve account, which is maintained in case of emergencies -- if a transformer blew, for example, Dwyer said.