NV Energy is proposing to raise its flat rate for service across Northern Nevada while lowering how much customers pay for actual energy use — a move watchdog groups say penalizes customers with low incomes or those who curb their power usage through conservation or by adding rooftop solar installations. 

Beginning in October, the state’s primary electric utility is looking to roughly triple its basic service charge for single-family residential customers to one of the highest rates in the nation, and double the charge for those living in multifamily housing units. NV Energy is also requesting a basic service charge increase for its Northern Nevada natural gas customers. 

NV Energy is simultaneously proposing nearly halving the cost electric customers pay per kilowatt hour, guarding them against large seasonal fluctuations in summer and winter, according to the utility.

The highest basic service charge in the nation?

The basic service charge electric users pay typically covers costs incurred to serve individual customers such as service lines, meters and accounting and billing services, with the bulk of customers’ bills based on actual energy usage. 

But utilities nationwide have recently been proposing a switch to larger fixed charges, lowering risks to the utility’s revenue stream from factors such as weather or economic downturns, according to Advanced Energy United (AEU), a nationwide industry association focused on clean energy.

AEU surveyed all other large investor-owned utilities nationwide, and many smaller companies. The survey showed that a basic service charge of $45.30 would not only push NV Energy’s fee to second-highest in Nevada for single family residences behind only a small rural co-op, it would also boost the utility’s basic service charge well above the national average of $11.66 charged by 170 other investor-owned utilities.

The highest fixed charge in the nation for investor-owned utilities is currently $37.41, in Mississippi, according to AEU.

“This would basically earn NV Energy the regrettable distinction of having the highest fixed charge in the nation,” said Emilie Olson, senior principal at AEU.

At the same time, the utility wants to up the rate of return on equity its shareholders receive from 9.5 percent to 10.4 percent. Like other investor-owned utilities, NV Energy sets its rate of return — a regulator-approved profit margin the utility is allowed to make on the sale and service of electricity to incentivize capital development and pay shareholders. 

Instead of raising the basic service charge, Olson said the utility should focus on thoughtful rate design. This could look like offering time-of-use rates that better reflect actual costs to the grid, such as lower rates during the cheapest and cleanest generating hours and higher rates during peak usage times.

“We should be thinking about incentivizing people, not necessarily punishing them,” she said. “We’re not rewarding people for taking certain actions and making certain investments that have a net benefit to the grid … If the fixed charge goes through, it will be a blow to the solar industry.”

Will customers save on their bills? 

Sheila Hallstrom, principal at AEU, believes NV Energy has proposed the rate increase to coincide with the decrease in natural gas prices so that, if approved, customers experience less sticker shock.

“They are saying bills might go down, but once you add the fixed rate, they won’t really go down,” she said. “There’s minimal ways to reduce the bill once you have this fixed rate attached.”

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