Nevada utility regulators are preparing to fine NV Energy $100,000 for not complying with a signed agreement to allocate $10 million in incentive payments for energy storage systems.
According to a draft order published on Friday and approved unanimously during the Public Utility Commission’s Wednesday meeting, the utility essentially ignored commission orders implementing a 2017 state law that required the company to put aside $10 million in energy storage investments, instead using the funds to pump up subsidy payments for solar installations. The fine, which will be deposited in the state’s general budgetary fund, is the maximum amount allowed under Nevada law.
News of the utility’s noncompliance with past PUC directives first came in July, when it was revealed in a lengthy order for the utility’s annual clean energy incentive plan that NV Energy never set aside the funds for the nascent program, despite multiple agreements to do so in a docket implementing the 2017 legislation and in its 2018 annual plan.
In a statement, NV Energy spokeswoman Jennifer Schuricht said the company had reached the stipulation agreement with the PUC to avoid further regulatory proceedings and to “focus our efforts on advancing clean energy technology options for our customers.”
“NV Energy spent all funding on PUCN approved renewable energy programs in the state of Nevada,” she said in an email. “This matter involved the allocation of monies between various approved programs. We continue to be committed to driving the growth and adoption of energy storage and other small-scale clean energy technologies that benefit our customers.”
Under a 2018 PUC order, the Commission ordered NV Energy to set aside $5 million each in incentive payments for small and large scale energy storage systems, following a 2017 law expanding the use of an existing incentive program (set up in 2004) used to provide funding assistance for solar, wind, geothermal and other clean energy programs.
But the incentive program, which is funded through a small surcharge on electric bills, is nearly depleted — NV Energy’s own November 2019 report states that more than $265 million of the legislatively mandated cap of $295 million has already been paid out. Only $15.5 million remains available for all incentive programs, including $10.9 million for electric vehicles and $3.2 million for energy storage projects.
In the order, utility regulators found that NV Energy improperly moved $4.7 million that should have been reserved for energy storage to the solar incentive program. Although the company moved more than $5 million back to energy storage incentives in June, other obligations and the dwindling balance of the incentive fund left means that there was no way to fully restore the $10 million required under the commission order.
“Because the incentive money that should have gone to the energy storage systems was paid out to customers to incentivize other programs, the Commission found that there is no longer adequate funding available to remedy the required set-aside, and further ordered the opening of the instant show cause proceeding,” a PUC attorney wrote in a stipulation agreement.
In the stipulation, the utility and PUC wrote that demand for the two categories of energy storage “has not been robust as originally contemplated,” and agreed that the company would revisit the issue in the next annual incentive plan filing.
Applications for energy storage system incentives have been low since the program opened in September 2018, with the most recent monthly incentive report showing just $29,507 in claimed incentive funds (but nearly $1 million in reservations).
The noncompliance and opening of a “show cause” docket is the first such instance for NV Energy since at least 2005. In a similar and recent case, the PUC staff assessed a $94,000 fine for Southwest Gas, which broke a stipulation with the Commission to not recover costs for a replacement backhoe and natural gas leak in its 2018 general rate case.
Outside of the issue with incentives, NV Energy has made strides throughout the last two years to dramatically ramp up its energy storage capacity, as part of an effort to double renewable capacity by 2023. In addition to multiple new renewable power purchase agreements, the utility has signed contracts that include creation and use of up to 2.3 gigawatt hours of battery storage (a gigawatt hour is equal to 1 million kilowatt hours; a refrigerator used around 54 kilowatt hours a month.)
Updated at 10:25 a.m. to reflect the approval of the fine by the Public Utilities Commission during their meeting on Wednesday on Dec. 18. Updated at 11:46 a.m. to clarify that NV Energy failed to comply with Commission orders implementing the 2017 state law, not the law itself.