The Nevada Current reports that NV Energy is seeking to make demand pricing charges mandatory for all customers, potentially adding between $20 to $38 to the average monthly bill for Southern Nevada residents. United's Sheila Hallstrom pointed out that this plan could actually penalize and increase costs for customers that have already taken advantage of independent energy solutions.
NV Energy’s bid to calculate customers’ bills based on their highest usage of the day rather than total consumption could add between $20 to $38 to the average monthly bill for customers in Southern Nevada, and penalize energy-efficient users, according to a trade organization that represents renewable energy interests.
The utility, as part of its general rate case request for a 9% rate increase, is asking the Public Utilities Commission of Nevada to allow it to base electricity rates on the maximum daily demand customers place on the electricity grid, rather than all of the energy used in a month.
Under the proposal for daily maximum demand billing, in addition to the $18.50 monthly service charge, the utility would determine the amount of energy consumed during a 15-minute period of peak usage each day, multiply it by four to determine an hourly rate, and charge .19 cents per kilowatt hour (kWh) during that hour, compared to the .11 cents per kWh it currently charges.
A customer using 3.5 kWh during the peak would pay an additional $19.95 per month, according to testimony from Janet Wells, a regulatory vice-president for NV Energy.
A customer using 5 kWh would pay $27 more per month, while a customer using 6 kWh would pay $38 more per month, according to data provided by Advanced Energy United, a trade group that represents renewable energy providers.
Total usage during the monthly billing period would be irrelevant.
Demand charges are designed to reduce the strain customers put on the grid at late afternoon and early evening hours.
“If you get home at 5 p.m. and turn your air conditioning on, and run your dishwasher and turn on your lights from 5 p.m. to 5:15 p.m., that is what they’ll multiply to create your usage,” says Sheila Hallstrom of Advanced Energy United.
The utility currently offers demand pricing as an option for residential customers, but is seeking to make the charges mandatory.
Proliferation of rooftop solar is among NV Energy’s reasons for pursuing the maximum demand charge. By law, solar rooftop customers are charged rates “far below cost-based levels,” Jeffrey Bohrman, director of Regulatory Pricing and Economic Analysis for NV Energy testified before the PUC.
The utility contends the charge will help lessen the burden on full-service customers who subsidize costs for those with solar panels.
“That’s not necessarily accurate,” says Hallstrom “I think it’s a way to raise rates on all customers and disincentivize customers from continuing to invest in solar and other distributed energy resources.”
The move also “penalizes customers that have already taken advantage of the independent energy opportunities in Nevada,” Hallstrom said during an interview Tuesday.
NV Energy contends its $18.50 monthly service charge for Southern Nevada customers is inadequate. Given its unsuccessful effort last year to triple the service charge in Northern Nevada to $45, the utility is proposing the demand charge for residential and small commercial customers in the south.
The utility says the demand charges allow it to more accurately price its services, while offering consumers flexibility in controlling their use.
“The better reflection of cost causation through effective price signals results not only in increased equity among customers, but also communication with customers about how their behavior affects costs,” Bohrman said.
“Not a single utility across the country is doing this,” says Hallstrom, adding that regulators in other states have rejected similar proposals from other investor-owned utilities. “Part of the reason is because it’s too complicated for people to really understand. NV Energy’s reasoning is that customers will be able to change their energy use, but they can’t necessarily do that if they don’t understand their bills.”
The complexity of the rate is “very often relied on by opponents of residential demand charges,” Bohrman testified, adding the argument can “be misleading to decision makers.”
Should the PUC turn down the proposal, NV Energy wants to increase the basic service charge in Southern Nevada from $18.50 to $24, far less than the projected increase of maximum demand charges.
The PUC is holding the first of several consumer sessions on June 4. If approved, demand charges would go into effect April 1, 2026.
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