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September 23, 2014

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Why a power rate hike was inevitable

Residential bills are set to rise 10-15 percent

Nevadans’ base residential electricity rates will go up on the first of the year, likely by double digits. That would be about a $15-per-month hit on today’s average utility bill of about $140 a month.

It’s a bitter pill to swallow for residents in a state with the nation’s highest unemployment and where most people owe more on their homes than they’re worth in today’s market.

Still, the decision by the three Public Utilities Commission members, who are appointed by the governor, is seen as relatively consumer friendly.

The primary driver for the rate increase, estimated to be from 10 to 15 percent for single-family homes, came in 2008. That’s when state regulators approved construction of the $700 million, natural gas-fired Harry Allen Generating Station 25 miles north of Las Vegas. It was built to increase the utility’s ability to generate electricity instead of having to purchase power on the open market.

“In a lot of ways, this (rate increase) was a fait accompli,” said Eric Witkoski, the state’s consumer advocate, who heads the state’s Bureau of Consumer Protection.

The PUC approved the draft report on the general rate case last week. The exact size of the rate increase for single-family homes is expected to be announced by NV Energy, possibly as early as today.

PUC Commissioner Rebecca Wagner estimated last week that increase would be 10 to 11 percent for single-family homes. The Bureau of Consumer Protection thinks it will be closer to 15 percent.

NV Energy had asked for a rate increase of 24 percent.

Wagner, during a public hearing on the rate case last week, said the commission tried to disallow costs submitted by NV Energy as much as possible. Previously, commissioners had said that they were sensitive to the fact that Nevada’s energy rates are the second highest in the West, trailing only California.

The Bureau of Consumer Protection had opposed the plant’s construction, arguing that the utility didn’t need such a large unit, capable of generating 484 megawatts — enough to supply about 375,000 homes.

“The biggest frustration is the investment the company made in the Harry Allen plant in Las Vegas,” said Dan Jacobsen, technical staff manager at the Bureau of Consumer Protection. The plant “was more capacity than the company needed. The company should have been watching what was happening to the local economy.”

Rob Stillwell, spokesman for NV Energy, said it was still calculating the effect of the rate case. The increase would be offset on power bills by a decrease that went into effect on Oct. 1 because of lower fuel prices, he said.

Part of the savings is also due to the added efficiency of new power plants such as Harry Allen.

Stillwell said the company has no immediate concerns about the decision.

The Bureau of Consumer Protection said there are some wins for consumers.

Most glaringly, the commission reduced the company’s return on stock from 10.5 percent to 10 percent. The company had asked for an increased return to 11.25 percent, and the Bureau of Consumer Protection had asked for 9.8 percent implied level of profit.

“We think this is a step in the right direction,” Witkoski said.

PUC members also said the company could not pass on raises it gave employees or the cost of a new computer system to ratepayers.

Las Vegas Sun Bureau Chief Cy Ryan contributed to this story.

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  1. 'inevitable'...

    Like the heat of the desert sun.

    But, thank goodness the PUC
    'saved' us!

    Then again...

    "PUC Commissioner Rebecca Wagner estimated last week that increase would be 10 to 11 percent for single-family homes. The Bureau of Consumer Protection thinks it will be closer to 15 percent."
    'NV Energy had asked for a rate increase of 24 percent.'

    In the epicenter of the 'Great Recession', NV Energy ASKED FOR a rate increase of 24 PERCENT!
    This from a utility that gave their CEO Michael Yackira $5.34 MILLION out of a total of nearly $15 MILLION in 'executive compensation' in 2010...

    http://insiders.morningstar.com/trading/...

    Well, all I can say is a heartfelt THANK YOU to the PUC for 'watching out' for us consumers!

  2. What good is a privatized utility, other then to reward a small group of sycophants large bonuses?

    The 2010 Executive Compensation for NVEnergy was up 33% to $14,449,058. Privatization allows the money to flow into the hands of a few and the public still gets rate increases. Executives get whopping bonuses while their employees are told to 'share the sacrifice'. Right, sacrifice lemon aide for cognac. Tell me where it hurts.

  3. Because the utilities here in Nevada tend to be MONOPOLIES, the little guy citizen doesn't stand a chance. Ever wonder why there is NOT a proliferation of solar, wind, and geothermal energy useage??? It is because the monopoloy utility made damn sure there were restrictions/policies/laws enacted so that the little guy homeowner can NOT install such innovations without serious red tape, road blocks, and exorbinate costs. To top it off, the new SMART METERS do NOT allow the integration of these technologies. The deck is stacked AGAINST the little guy citizen.

    At one time, Nevada was attractive to retirees and those looking for a fresh start, but no longer. Gone are the cheap buffets, property values, reasonable costs of living, and if still working, job opportunities. Who has the spare money to enjoy what is here anymore? Not everybody, not many.

    Crimes will go UP because of the PUC allowing these rate hikes. Problems within multi-family homes will fester with the ever increasing utility costs. People fight over utility useage costs, and you only unplug, not water, and be deprived of comfortable environments to a point. We have reached it. The little guy citizens have had to "harden themselves" in utility useage, only to be further victimized by rising costs imposed by monopoly utility companies that continue to PROFIT and give their company officers huge raises while the little guy is FORCED to tighten their financial belts. We cannot CUT useage any further.

    The monopolies and the PUC have betrayed the little guy citizens.

    SHAME SHAME SHAME

    Blessings and Peace,
    Star

  4. As long as these companies contribute to Harry, the power will go up by double digits..The average bill, 140 dollars is for a one-bedroom. We are allowing all the utilities to operate outside ventures on our dime, as well as pay huge salaries and bonuses to the bosses. Where will it stop! Please, I ask you, where will it stop? Or roll back..we are hurting so dang bad, and we just keep getting kicked while we are down. We can't recover...Our President promised us that our utilities will double by the end of his administration. Thank you President...I wish it didn't go that high, but it does.

  5. Comment removed by moderator. Personal Attack

  6. Be careful what you wish for. 70% of the highest rates in the country are from states that have deregulated power companies.

    Most Expensive Electric Prices [Cents per kilowatthour] [Deregulated, yes or no]

    1. Hawaii -- 30.13 (no)
    2. Connecticut -- 18.03 (yes)
    3. New York -- 17.40 (yes)
    4. Alaska -- 16.61 (no)
    5. New Hampshire -- 16.34 (yes)
    6. Rhode Island -- 16.21 (yes)
    7. New Jersey -- 16.14 (yes)
    8. Vermont -- 15.79 (no)
    9. Maine -- 15.78 (yes)
    10. California -- 15.30 (yes)

  7. The timing of this move is highly suspect.

    Just last week, they came by and installed some new fangled Smart Meter. Then told me it don't cost anything and won't appear on my bill.

    Now the news this week where it's going up ten percent?

    So that they don't have to come by and look at my meter anymore, and it saves them money, and I guess it's supposed to save me money, just where the hell is that extra money going if nobody needs to come out and read it anymore? It sure ain't comin' back to me.

    That's why they are calling it a Smart Meter. They are smarter than all of us dumb bastards out here. Excuse me, Mr. Person Who Lives In Las Vegas, we are allowed to screw you whenever we want, so, it's that time again, turn around, bend over and smile, damnit, YOU WILL LIKE IT BECAUSE WE SAY YOU HAVE TO!

    I get the impression prices of utilities could drop and they'd just think up something else like an energy sucking comet just passed by the Earth so we had to jerk up the prices again to make up for the shortfalls and energy generation working overtime to make up for that celestial event that may never occur ever again in anyone's lifetime.

    Not sure if anyone sees this, but they make sure to raise it during the winter. Because if they raised it during the summer when air conditioners are on 24 hours a day with triple digit weather, they'd know we'd howl in rage even more.

    Okay, I'm through with my rant. Ain't gonna do any good, but it felt good to get that out there....

  8. What the PUC is doing is equivalent to the what the US congress is doing .... screw the little guy, reward the top 1% with more money, find fancy language and bribe money to cover their tracks, and let the good times roll for all of THEM. The welfare of this country's citizens is left to their ability to bleed money to keep the rich rich.

    It doesn't end until EVERY citizen making less than $100k a year just STOPS paying. Use firewood from the abandoned houses that are rotting in the wind in your fireplace.

    Take ALL of your money OUT OF THE BANKS. Take all of your money you have invested (or what's left of it) OUT OF THE MARKET or 401k. It's to make someone else rich on your dime.

    No more pensions for government employees...let them use Social Security like the rest of us.

    No more lifetime, all expenses paid health insurance for government employees...let them use Medicare like the rest of us.

    We need to hit them in the wallet, the way they hit us.

    Every veteran from WWI, WWII and Korea fought to DEFEND our American way of life and defeat tyranny. Every veteran since then, fought to make the rich richer: Viet Nam, Gulf War, Iraq, Afghanistan.

    NO GUTS, NO GLORY. --Show some American spirit and DEMAND change.

    How? STOP BANKING, STOP PAYING UNFAIR UTILITY BILLS, UNFAIR GAS PRICES, DEMAND THE END OF LOBBYISTS, AND DEMAND THE END OF THE INCOME TAX, AND MAKE SURE THERE ARE TERM LIMITS IN CONGRESS, WITH PAY CAPS, AND NO BENEFITS.

    IF EVERY WORKER STAYED HOME FOR ONE WEEK, AND SHUT THIS COUNTRY DOWN, CHANGE WOULD SOON COME ABOUT! THE PERFECT WEEK SHOULD START ON PRESIDENT'S DAY, WITH MILLIONS OF US SITTING ON CAPITOL HILL.

  9. For what its worth, I just moved here from Connecticut where we had all types of promises regarding deregulation. All we got from CL&P and Northeast Utilities were HUGE increases in power costs. Seriously, if you think deregulation is the solution, you better do your home work or you'll be in for a nasty surprise!

    T

  10. So what some of you are saying is we should take the screwing we are getting in stride without complaining because it's not as bad as how much you got screwed???

    That's EXACTLY what is wrong with the thinking of the American people today! Excuse me, but rape is rape, no matter how bad it hurt...it's still a crime.

  11. Our PUC is truly pathetically worse than useless. They say: rates have to go up because NV Engergy has built a new gas-fired power plant. Reality is: the price for natural gas to burn in that new gas-fired power plant is at a historic low, and likely to stay there. If the cost of production is down, why would rates have to go up?

    PUC Argument No. 1: Consumers have to pay up because NV Energy built the plant too large. A. Huh? Why can't the highly compensated executives who made the goof -- and the investors who allowed it -- pay for it? That would be the natural Capitalist consequence. (Unless, in Nevada, Capitalism is uni-directional with gains going to capital (and CEOs) but losses gettting socialized B. If you divide the $700 Million in capital cost by the life of the plant (average is 50 years), that comes out to an amortization of $14 Million/year, divided by 2 Million population, or $7.00/year per person per year, times 2.3 average household size, or a rate increase attributable to capital of about $16.10 per year per residence, or about $1.34 per month per residence. (Must I point out that this is less than 10% of the rate increase supposed justified by the PUC on the basis of an oversized plant.)

    PUC Argument No. 2: NV Energy needs a higher return on capital. A. We are living in a world in which the market is eagerly seeking a 2% return on a 10 year investment in U.S. Treasury Notes, and stocks yielding 4% are considered high returns. Only true doofuses (or the truly corrupt) could be persuaded that 10% was required by investors.

    The costs of generating power are declining because the price of natural gas is declining and is likely to stay low because of all of the new production coming on stream and because (in the real world) the cost of capital is declining. Our electric rates should be going down. Thanks to our PUC we are being stuck with an increase which is completely unjustified.

  12. Whatever the "necessary" increase is, just deduct it from your bill each month and DON'T PAY IT.

    I think there should be a class action suit filed against the PUC and NV on behalf of Nevadans.

    Any legal eagles out there?

  13. Power should be from a non profit.

  14. There is so much political manuevering via Governor Sandoval appointing one of his pals into the PUC, while after the 76th Nevada Legislative Session, vetoing down the NV Energy request for the Billion Dollar transmission lines to be paid by Nevada taxpayers(it sure made him look good, even to me, by him doing so).

    Nevada is all about POLITICS. The Rich take care of the Rich, then, now, and forever.

    The bad dreams never seem to stop here. The little guy citizen, middle class, and working class citizens are fast becoming the new poor, losing financial traction on the bumpy economic road to the American Dream.

    Blessings and Peace,
    Star

  15. With Sandovals election we now have had 17 years of Republican governors making appointments to our state commissions like the p.u.c. and yet the people of nevada are still surprised that these appointees screw over the little Guy?

  16. Funny I thought it was the short sighted turn away from cheap clean coal. Welcome to fake green energy.