Starting in April, power bills for all of NV Energy’s Southern Nevada customers will now be based on the maximum amount of electricity used at a single point during a day — no longer following the traditional billing practice of charging based on total electricity consumed.

The change has been touted by the utility as a way for customers to save money. But it’s drawn the opposition of energy experts, solar companies and the state’s Bureau of Consumer Protection, who call it confusing and likely to penalize solar customers.

In addition, Southern Nevada NV Energy customers are being asked to foot a large portion of the bill for the utility’s $4.2 billion transmission line while the project is under construction.

The requests were approved without discussion or debate by state energy regulators on Tuesday as part of the utility’s general rate case, which the utility is legally required to file at least once every 36 months. The process allows regulators to review the utility’s revenues and expenses as it seeks to change the rates charged to customers. 

In a move described as unusual by those familiar with the process, a draft of the decision was not released until late Monday afternoon, giving two of the three members of the Public Utilities Commission of Nevada (PUCN) less than 24 hours to review it before voting. Portions of the PUCN’s website also remain offline after the state experienced a cyber attack in late August.  

The utility originally had requested an additional $224 million in annual revenue over its existing annual operating budget of $2.49 billion; regulators approved less than two-thirds of that request, although they did not pinpoint what that number is.

“The Commission shares the concern voiced by many ratepayers … that costs for everything are increasing and that electric bills are becoming unaffordable,” according to the order. “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 utility also sought to introduce a special rate for low-income customers and to change how net metering (solar) customers are billed. State energy regulators denied both of those requests, although they did grant the utility the ability to alter the way future Northern Nevada solar customers are billed.

State energy regulators also ordered NV Energy to inform them what effect increases will have on customers by Oct. 1.

Daily demand charges

The utility’s adoption of what’s called daily demand charges will be the biggest change for its Southern Nevada customers. 

A demand charge is based upon the maximum amount of power required by a customer during a set amount of time. It shifts a customer’s bill from how much electricity is consumed over a day to how much electricity is needed at a single point. NV Energy’s billing structure pivot deviates from the utility’s current practice of basing bills off the amount of power used by customers each month, known as volumetric pricing.

Energy experts previously told The Nevada Independent that this is the first time an investor-owned utility in the U.S. will apply this kind of mandatory billing structure to all residential customers. In Nevada, large businesses already pay a demand charge.

Steve Hamile, chair of the board for the Nevada Solar Association, said in a statement that the decision turns Nevada “into a guinea pig.”

“No investor-owned utility in the country has demand charges for residential customers,” he said. “And for good reason."

For residential customers, the demand charge will be based on a customer’s highest 15-minute period of energy usage.

For example, if a customer uses the most power between 5:30 and 5:45 p.m., their bill for that day will be based on the energy used during that time. 

That 15-minute burst will be multiplied by four to get an hourly total, with that number then multiplied by a cost per kilowatt per day. This will determine the demand charge, which customers will pay in addition to their volumetric rate — the amount of total energy they used. The utility will lower the cost customers pay per kilowatt hour, meaning the volumetric portion of the bill will likely be lower. 

Customers will also still be charged a basic service charge fee.

“NV Energy teams are already in the process of analyzing the various components of the order and what it means to Southern Nevada customer bills and rates,” a spokesperson for the company told The Indy in a written statement. 

The utility has previously said the change would encourage customers to level out their energy usage throughout the day, thus reducing strain on the grid during times of peak energy usage.

But energy experts generally agree the shift will be extremely confusing for customers. The state’s Bureau of Consumer Protection also said that the proposed demand charge will lead to customer confusion and disproportionately affect low-income households.

PUCN spokesperson Peter Kostes said in a press release that “the intent is to enable many … residential customers to experience lower bills without reducing their energy usage.” 

Net metering

The change to daily demand rates extends to net metering customers as well. Net metering programs allow rooftop solar customers to use energy generated from their systems as an offset on their monthly power bills. The offset price of power produced is at a percentage of the retail rate of electricity — making it lucrative for customers and uneconomical for the utility.

Regulators said that a daily demand charge for all customers is a “reasonable solution” for the utility to counter the lesser amounts that solar customers pay compared to standard retail customers. According to the Solar Energy Industries Association, more than 144,000 Nevada homes have solar, primarily in Southern Nevada.

“The existing rate design for [net metering] customers does not cover the full cost of serving them,” the commission said in the order. 

Energy regulators did, however, deny shifting the way the utility measures energy generated by Southern Nevada solar customers by shifting from monthly to 15-minute increment net metering.

However, regulators did say that the utility can implement 15-minute rather than monthly netting for future Northern Nevada solar customers. There are fewer solar customers in Northern Nevada, and the smaller-scale rollout of the new billing process will “ensure that concerns raised about its technical feasibility can be considered,” according to the order. 

Greenlink

Commissioners also agreed to let NV Energy charge its Southern Nevada customers for a sizable portion of the under-construction $4.2 billion, partially permitted, transmission project known as Greenlink. The commission had previously designated Greenlink as a critical facility, which allows the utility to request funding while construction is underway.  

Ultimately, Southern Nevada utility customers will cover 70 percent of Greenlink’s cost, while Northern Nevada customers will fund 30 percent, according to the order.

The commission approved 50 percent of the costs recorded to date for Greenlink as eligible for inclusion in the utility's rate request.

Estimates show that Southern Nevada residential customers will see a resulting price increase of between $4.35 and $4.42 per month.

“The Commission makes this decision with the unfortunate realization that representations made by NV Energy’s former chief executive officer … were either misleading or factually inaccurate,” the draft order said, referring to statements by former CEO Doug Cannon, who left the company earlier this year. 

In 2021, Cannon stated the utility would “bring $2.5 billion to the table” for the Greenlink project, adding that “Nevadans will not be asked to pay for this investment until at least five to six years down the road.” 

Nevertheless, the utility has shown a “need for additional cash flow to carry out the construction of the legislatively-mandated transmission project,” the order stated.  

The utility’s request also included a proposed billing change for low-income customers which would have removed the monthly service charge for customers whose income is less than 150 percent of federal poverty level (roughly $48,000 for a family of four).

Commissioners did not approve that rate, stating that it would increase costs for non-low-income ratepayers.