NV Energy peak demand charge, tweak to net metering, violate state law, say experts 

The Nevada Attorney General’s Bureau of Consumer Protection contends rate changes approved last month by the Nevada Public Utilities Commission as part of a $119 million rate hike for NV Energy are prohibited by state law. The BCP is one of several intervening parties now asking the PUC to reconsider its approval.

A hearing is set for Nov. 18 on the petitions for reconsideration. 

The PUC approved a peak demand charge that allows NV Energy to impose a higher kilowatt (kW) rate for the 15-minute period of the day with the most energy use. The change affects residential and small commercial customers in Southern Nevada. 

Nevada law, the BCP notes in its petition for reconsideration, prohibits the PUC from approving a rate that “requires a residential customer to purchase electric service at a rate which is based on the time of day, day of the week or time of year” unless the customer chooses to do so. 

To illustrate the apparent violation of law, BCP cites the commission’s order, which states the demand charge “‘varies based on the time during which the electricity is used.” 

Additionally, the BCP argues, another law prohibits the utility from charging “solar generators” (primarily rooftop solar customers) “any fee or charge that is different than that charged to other customers of the utility in the rate class” to which the customer would belong if they did not have a net metering system. 

The mandatory demand charge is unlawful to impose on full-service customers as well as on rooftop solar customers, the BCP asserts. 

Even if the demand charge is found not to violate the statute, its approval “is unreasonable as it lacks substantial evidence,” the BCP wrote. 

No other investor-owned electric utility in the U.S. mandates a peak demand charge. 

The BCP notes the commission, in approving the demand charge, stated the “uniqueness of the circumstances in Nevada warrants seeking rate design alternatives reflective of the legal and regulatory framework specific to Nevada.” 

“The so-called ‘uniqueness’ of Nevada is not a valid, sufficient rationale to implement a mandatory untested new time-based rate structure,” the BCP countered. The public’s response to the order has been “vehemently negative, confounding and filled with fear of rate-shock,” the BCP asserted.

Aggrieved ratepayers are expected to sound off on the uncertainties of the peak demand rate Wednesday at a consumer session at the PUC offices in Las Vegas.  

Nevadans for Clean Affordable Energy, Nevada Solar Association, Vote Solar, and the Solar Energy Industries Alliance are also seeking reconsideration of the demand charge.  

The BCP petition for reconsideration restates its opposition to NV Energy’s plan to calculate credits for excess energy returned to the grid by rooftop solar systems every 15 minutes rather than monthly. The change will only affect customers in Northern Nevada who install rooftop solar after Oct. 1 of this year. It’s expected to increase monthly bills for those customers by about $11 a month. It’s also expected to deter future investment in rooftop solar, because it delays the return on investment in the system.

In April, the BCP argued that Assembly Bill 405, passed by lawmakers in 2017, requires that NV Energy calculate excess energy monthly.  

“The BCP is dead right legally on this one and will prevail on appeal if the reconsideration is not granted,” Jon Wellinghoff, Nevada’s first consumer advocate and former chairman of the Federal Energy Regulatory Commission, said of the petition.

NV Energy contends the change is intended to reduce the disparity between rooftop solar and full-service customers, who subsidize solar customers to the tune of $50 million a year, according to the utility.  

“I don’t recall, in my 28 years (with the state) the Commission substantially modifying its original order because of a petition for reconsideration,” David Chairez, who retired this summer as the regulatory manager for the BCP, told the Current via text. He adds that Commissioner Tammy Cordova, the hearing officer in the rate hike case, may rewrite the order to “harden it for judicial review,” the next step in the appeal process.

Editor’s Note: This story was updated with comment from Jon Wellinghoff.