State utility regulators plan to investigate and possibly fine NV Energy for not following a signed agreement requiring the company to allocate $10 million toward an incentive program for energy storage systems.

As part of a lengthy order on the utility’s annual plan for clean energy incentive programs, members of the Public Utilities Commission found that NV Energy had “failed to comply with a Commission order” implementing a 2017 law creating and mandating incentive payments aimed at spurring development in residential and large scale energy storage systems. The order was approved by the three members of the Public Utilities Commission in a unanimous vote last Wednesday.

In the order, members of the commission wrote that NV Energy had agreed but then failed to set aside $10 million in funding from the utility’s existing incentive funding pool to use toward energy storage incentive programs. Despite the utility agreeing to the order in a docket implementing the 2017 legislation and in its 2018 annual plan (including signing a stipulation), the utility ultimately never set aside the funds for the nascent program. 

Complicating matters further is that total funding for the incentive program — initially set up in 2004 and aimed at ramping up investment in solar, wind, geothermal and other clean energy programs through a surcharge on electric bills  — is nearly capped out. As of May 20, only an approximate $6.1 million of the original $295.2 million allocated for the program remains available for use, and all programs save a low-income solar program, a carved out electric vehicle incentive program and the energy storage program are ending as of July.

“However, despite being ordered to set aside the $10,000,000 for energy storage and signing a stipulation to that effect, NV Energy failed to set aside the requisite amount for energy storage,” the Commission wrote in the order. “Indeed, NV Energy stated that it considered the $10,000,000 set-aside to be a consideration rather than a hard set-aside, despite language in both Orders and the stipulation.”

The commission ordered all remaining program funds be dedicated to the energy storage program (save $1 million for a low-income solar program and a separate electric vehicle plan exempted from the $295 million limit), but it’s unclear how long or whether incentive funds for the energy storage systems will continue to last. 

Applications for energy storage system incentives have been low since the program opened in September 2018. The utility’s most recent monthly incentive program report for May 2019 showed just six projects have been completed, with just over $10,000 in incentives paid out since the program opened up last year.

NV Energy’s conduct is apparently in violation of SB145, a bill sponsored by Democratic Sen. Pat Spearman in 2017 that created and set the boundaries of energy storage incentive program. Spearman did not return a call seeking comment.

Cameron Dyer, a staff attorney for Western Resource Advocates, said he estimated that roughly $4 million in funding would be left over for energy solar incentive programs, which would likely be enough to cover demand in the next few years for small-scale residential programs given the relatively small number of applications for energy storage systems, but would likely preclude any large programs from using the incentive funds.

“However, this remaining $4 million in funding is split between the large and small energy storage incentive programs,” he said in an email. “As a result, any one large system could deplete this fund.”

That dwindling funding means the PUC “lacks remedies” to address the shortfall, thus leading to the opening of a docket on Friday to determine whether the utility should be fined for noncompliance. State law gives the Commission the ability to levy administrative fines, limited up to $1,000 per day or $100,000 for any “related series of violations.”

The noncompliance and opening of a “show cause” docket is the first such instance for NV Energy since at least 2005, according to online records of the Public Utilities Commission. In a similar case, the PUC staff calculated a $94,000 maximum 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.

According to a written transcript of a hearing on the incentive program held on May 20, NV Energy employee Vincent Veilleux told the commission that the utility was concerned that setting aside the energy storage incentive funds would deplete remaining funds for the solar incentive program at an accelerated rate, saying it interpreted the orders on energy storage as “not a hard set-aside but a consideration.”

“I believe it went down, it came down to our interpretation and understanding that NV Energy should set aside the 5 million per program, and given our understanding of where the remaining funds, how much of the remaining funds existed, that setting aside 10 million along with the 15 million would have caused a dramatic acceleration of the...Solar Program closure,” he said, according to a copy of the transcript.

Veilleux also testified that to his knowledge, the utility had never requested clarification on its interpretation of the order from the PUC.