The Public Utilities Commission of Nevada scrapped “more than a third” of NV Energy’s $224 million rate hike request, approved a daily peak demand charge for residential and small business customers in Southern Nevada, and tweaked net metering calculations for rooftop solar customers in the north. The exact amount of the rate hike won’t be known until Oct. 1. 

The changes in rate design are an effort to reduce what regulators say is a $50 million annual subsidy paid by full-service ratepayers to offset the lower costs enjoyed by rooftop solar customers.  

The peak demand charge allows NV Energy to impose a higher kilowatt (kW) rate for the time of day with the most energy use. 

Opponents of peak usage rates say the scheme penalizes working people who are not home to spread out their use of household appliances. 

In addition to the $18 monthly service charge (reduced from $18.50), the utility will 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 kWh during that hour, compared to the .11 cents per kWh it currently charges. 

A customer using 5 kWh is expected to pay $27 more per month, while a customer using 6 kWh could pay $38 more per month, according to data provided by Advanced Energy United, a trade group that represents renewable energy providers. 

“This decision undermines energy efficiency and affordability, all at a time when we are in an energy affordability crisis,” Sheila Hallstrom, a regulatory lead for AEU, said in a statement.  “Utilities should be incentivizing smart energy choices, not taking them away and punishing customers.”

NV Energy’s alternative to a peak demand charge was an increase in the basic service charge in Southern Nevada from $18.50 to $24, far less than the projected maximum demand charges. 

As an alternative to imposing peak demand charges, NV Energy asked for an increase to the basic service charge in Southern Nevada from $18.50 to $24, which would have been far less than the projected maximum demand charge, and a lighter increase for consumers.

But the PUC chose the peak demand charge anyway.

“At the end of the day, my goal in drafting this order was to find a way to make sure that folks were paying for the cost of the service that’s provided to them,” Commissioner Tammy Cordova said at Tuesday’s hearing, where there was no discussion or debate on Cordova’s recommended order, which the commission approved unanimously.

Evidence presented by NV Energy suggests the daily demand charge “will lower power bills for nearly all of NV Energy’s customers…” according to a PUC news release. 

The assertion “defies logic,” Las Vegas resident and frequent PUC critic Angel DeFazio said Tuesday during public comment. 

David Chairez, who resigned this summer as the regulatory manager for the Attorney General Office’s Bureau of Consumer Protection agrees the PUC’s assertion is wrong. 

“If you’re increasing rates by roughly $146 million, you’re not going to have a lower bill. You’ll  have a higher bill,” he said. 

Nevada, Chairez noted, “is now the only state that has a mandatory demand charge from an investor-owned utility,” adding he’s been engaged in utility ratemaking for 28 years “and I don’t know what the kilowatt demand is on my air conditioners, or on my oven.”

The PUC also approved NV Energy’s bid 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.   

The shift, another effort to reduce the disparity between rooftop solar and traditional customers,  applies to homeowners 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, and delay the return on investment of those systems.

Rather than the PUC engaging in piecemeal rate design to compensate for the disparity between traditional and solar customers, Chairez contends ratepayers would be better served if lawmakers addressed the root of the problem – a state law passed in 2017 that requires rooftop solar and traditional customers be counted in the same regulatory class, which he says prevents an accurate study of their costs. 

In 2024, NV Energy served roughly 505,000 non-solar residential customers and 105,000 rooftop solar customers, according to afederal regulatory filing.

Rooftop solar customers “would be the third-largest customer class, behind single family residential and multifamily residential,” says Chairez. “It makes sense that they should have a separate cost of service study.” 

“The Commission shares the concern voiced by many ratepayers at consumer sessions and in written comments that costs for everything are increasing and that electric bills are becoming unaffordable,” the PUC’s order said. “However, the same economic pressures that are increasing costs at the grocery store and at the doctor’s office are increasing costs for Nevada Power (NV Energy).”  

The PUC also approved charging Southern Nevada ratepayers for construction work in progress on Greenlink, a $4.2 billion transmission line, which is expected to increase bills by more than $4 a month in the south. The cost of the project is projected to be split 70/30 by customers in Southern Nevada and Northern Nevada respectively. 

The commission “is charged in part with protecting the financial health of the utility,” Cordova wrote in justifying the inclusion of the cost of construction in progress to rates. 

Parties that disagree with PUC orders have 10 days from the day the order is issued to file a motion for reconsideration.  

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