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September 20, 2014

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NV Energy customers — see why the company is doling out some of its profits to you

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Steve Marcus

Smart meters hang on a rack at the NV Energy meter shop Tuesday, March 6, 2012.

The Nevada Public Utilities Commission has ordered NV Energy to refund customers $14.5 million because the company earned a higher profit than allowed.

Today's decision, drafted by Commissioner David Noble, rejected NV Energy's argument that the present regulations do not permit the commission to return extra profits to customers.

Karl Walquist, spokesman for NV Energy, said it would abide by the PUC order.

Daniel Jacobsen, technical staff manager of the state Bureau of Consumer Protection, called the ruling a “victory for consumers.” The law, he said, permits the commission to order the refund.

The ruling means a refund of $10 million to customers of Nevada Power Co. in Las Vegas and $4.5 million to consumers of Sierra Pacific Power Co. in Reno.

It will mean an estimated $7 refund for residents.

Both the staff of the PUC and the consumer bureau had petitioned the three-member commission to have the $14.5 million returned to customers. Nevada Power was authorized to earn a rate of return of 8.17 percent but realized 8.71 percent in 2012. Sierra Pacific’s authorized rate of return was 8.06 percent, but it reported an 8.50 percent rate of return.

NV Energy has been directed to promote efficiency and conservation programs. In return, the utility is authorized to make up for its lost revenue by charging higher rates. But there was an over-collection from customers of rates to restore the lost revenue.

In his order, Noble said the law “is clear on its face that the lost revenues compensation shall not contribute to the electric utility earning more than its authorized rate of return.”

Even with this refund, the staff of the PUC said the utility will still retain an estimated $17 million in additional earnings for Nevada Power and $2 million for Sierra Pacific.

NV Energy in prior arguments said the issue should be handled in regulations that need to be adopted in the future. It said the consumer bureau and the PUC staff are trying to “circumvent” the process in an effort “to confiscate earnings.”

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In another case, the PUC deferred a decision on a complaint by Nevada Power Co. that Valley Electric Association was improperly taking over its electric facilities to serve Creech Air Force Base north of Las Vegas.

Valley Electric, a cooperative, won a contract from the federal government to operate the switches, transformers and distribution lines to serve the base. Nevada Power, which previously operated these facilities, would still provide electricity to the delivery system.

A proposed order before the commission would have allowed the transfer. But Commission Chairwoman Alaina Burtenshaw suggested there be language in the proposed order that Valley Electric “should be careful” in extending its service to nonmembers outside its service territory in the future.

The commission will try to work out the language before its next meeting.

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