Efforts to restore Nevada’s stagnant rooftop solar industry are becoming more complicated, with the state’s primary utility proposing rate changes that would affect nearly all electric customers and potentially lower the value of reimbursement rates for rooftop solar customers.
In a 376-page application filed last week with the Public Utilities Commission, NV Energy proposed not only implementing favorable rates for rooftop solar customers as required by a law passed by the 2017 Legislature, but also implementing a major redesign of electric rates that would affect all electric customers — including those without rooftop solar panels.
Under the proposal, which is scheduled for an Aug. 17 prehearing conference with the PUC, the utility would merge several rate customer rate classes including net metering and normal residential customers, leading to a slight increase in the basic service charge (from $12.75 to $16.57 a month in southern Nevada and $15.25 to $17.58 a month in northern Nevada) for all customers. But the so-called volumetric charge on power bills — the portion of an electric bill based on actual electricity usage — should on average decrease by an equal amount, making the rate change revenue neutral for the utility and having no effect on an average customer’s bill.
NV Energy executive Doug Cannon said that the utility was legally prohibited from charging net metering customers extra fees, and that the proposal was consistent with the cost of service principles that NV Energy had followed at other times when they modified electric rates without causing a significant jump or decrease in electric bills.
“It’s mathematically based, consistent with principles we’ve been applying for years,” he said.
But the broad change in rates has elicited fear from rooftop solar industry representatives, who say the requested complex changes could lead to a drawn-out rulemaking process and could lower the reimbursement rates that are based on the volumetric charges.
Democratic Assemblyman Chris Brooks, who sponsored the bill during the 2017 legislative session, said that changing the rates for all customers was never brought up during the legislative session and that he was “disappointed” in the filing.
“It’s not what any of us envisioned, and it’s not the deal we made when we passed it,” Brooks said. “This is just another effort by NV Energy to slow down or stop the rooftop solar industry in the state of Nevada.”
Though Gov. Brian Sandoval signed AB405 into law back in June, the new favorable rates didn’t take effect overnight — the legislation gave the utility several months to design the new rate classes and tariffs needed to implement the new net metering rates. The utility requested the commission approve the rates by Sept. 1, though Cannon acknowledged that getting the new rates approved by that time would be a “significant challenge.”
Such changes to rates are typically accomplished through general rate cases, a different kind of filing which is required by law to be updated every three years.
In the application, the utility notes that changes in the basic service charge are the only way to achieve the mandate in AB405 that previously separate net metering and normal residential customer classes be subject to the same fees and charges. The application does note that the two-part rate structure (a flat basic service charge and variable volumetric charge) is “antiquated” and that it should evolve into a more precise pricing structure to better facilitate the cost of electricity with advancements in distributed generation.
The company notes that the proposed changes to customer classes and subsequent rate changes were only being brought forward to comply with the requirements included in the legislation, and weren’t designed to bring in additional revenue for NV Energy.
“It is important to note that Nevada Power and Sierra (NV Energy’s two main subsidiaries) are only proposing the modifications to the rate design in order to comply with the mandates of AB405, otherwise Nevada Power would have stayed consistent with its proposals in its pending rate review and Sierra would have seen no rate design change until its next scheduled rate review in 2019,” it wrote in the application.
The enacted law creates four separate tiers, or “tranches,” that reimburse rooftop solar customers for excess energy created and placed back on the grid with the value tied to the retail rate of electricity. The first tier reimburses customers 95 percent of the kilowatt hour price of electricity for the first 80 megawatts of installed rooftop solar capacity, with the reimbursement rate declining every additional 80 megawatts until hitting a floor of 75 percent.
Other pro-rooftop solar groups say that the rate design proposed in the application would make it more difficult to quickly accomplish those goals.
“Rather than implementing the bipartisan AB 405 and restoring net metering as the Legislature intended to bring back solar, NV Energy’s proposal would create new roadblocks to solar, more uncertainty and increased fixed charges for all customers without justification,” pro-solar energy advocacy group Vote Solar spokeswoman Jessica Scott said in an email. “The past two years have proven that the people of Nevada - both as ratepayers and as voters - absolutely will not stand for this kind of anti-solar, anti-consumer action from their leaders.”
NV Energy didn’t publicly come out in favor or opposition to the bill during the 2017 legislative session, but unsuccessfully pushed for an alternative amendment and warned legislators that the proposal would cost the utility tens of millions of dollars to implement.
The filing has already attracted a response from Vivint Solar, which announced in June that it was relaunching operations in Nevada and has already hired 50 employees in the state. The company requested to be included as a party in NV Energy’s application docket, and noted in a filing that it had a “strong economic interest” in the outcome of the proceedings.
“Rather than limit its focus to ensure net metering is available quickly to Nevada consumers, NV Energy has inserted many issues into the Application, which are outside the scope and intent of AB405 and which will cause undue and unjust delay, contrary to the public interest.”
The state’s Bureau of Consumer Protection also filed a motion to intervene in the case on Monday. In a statement, BCP head Ernest Figueroa said the agency had "concerns" with the application, "particularly with respect to the proposed Basic Service Charge increases."
In a statement, a spokeswoman for Sandoval said that the governor signed the legislation with the “full understanding and intention” that it would re-establish the rooftop solar industry.
“This filing is the first step in the complex process of rate-making,” Sandoval spokeswoman Mari St. Martin said in an email. “The Governor fully expects the PUC to give the filing a thorough and prompt review and looks forward to continuing our path toward securing Nevada’s clean energy future.”
Updated at 12:27 p.m. to include a quote from Bureau of Consumer Protection head Ernest Figueroa.
Disclosure: NV Energy has donated to The Nevada Independent. You can see a full list of donors here.