Andi Kaufman is a single mother on a fixed income.
She adjusts the thermostat at her Southern Nevada property to try to keep her power bill low, but last year she watched her monthly NV Energy bill jump from $91 to $245.
Carol Polk also saw her bill increase last year despite turning down her thermostat and unplugging unused appliances.
NV Energy is the state’s primary electricity provider, and passes fuel costs directly through to customers. That means the utility doesn’t make a profit on fuel sales, but when those costs rise, customers are left on the hook.
Over the past several years, its customers have faced higher bills brought on by spikes in fuel prices — triggered by everything from the pandemic to a fluke winter storm in Texas.
Now, proponents of a bill making its way through the Legislature are asking state energy regulators to search for a way to mitigate power bill volatility when fuel prices spike by potentially requiring NV Energy to have more skin in the game.
Introduced by Assm. Tracy Brown-May (D-Las Vegas), AB452 directs state energy regulators to investigate how fuel and purchased power costs are passed on to ratepayers and to potentially adopt what’s called a fuel cost sharing mechanism.
Fuel cost sharing essentially means that the utility takes on a portion of the fuel costs, instead of it being 100 percent paid by customers. Adopted in several other states, fuel cost sharing can work as an incentive for the utility to invest in renewable sources, such as solar, that don’t incur volatile fuel costs.
Under some fuel cost sharing scenarios, utilities bear a portion of the cost when prices spike above what the utility has forecast; if energy is procured at a price lower than the utility forecast, the utility would get to keep a portion of the savings.
The bill doesn’t set out an explicit percentage for fuel cost sharing, just instructing energy regulators that it should be “high enough to motivate the utility to keep fuel costs low, but low enough so that the utility is not exposed to unreasonable levels of risk and volatility.”
Fuel cost sharing brings “no harm to the utility and has an upside for customers,” Rebecca Wagner, a former state energy regulator who helped draft the bill, told lawmakers during an April 8 hearing in the Assembly Growth and Infrastructure Committee. States including Hawaii, Wyoming, Missouri, Wisconsin and Idaho have adopted similar mechanisms.
The bill also contains provisions intended to protect ratepayers who are incorrectly charged by the utility, closing an existing loophole allowing the utility to only partially refund customers it has overbilled. It also looks to extend the timeline for state energy regulators to address NV Energy’s regulatory filings, something proponents say will strengthen accountability and oversight.
But the proposed law — which passed out of committee April 11 — drew fierce opposition from the utility.
“The idea that customers are unprotected or that utilities lack incentive to manage costs simply is not true,” Janet Wells, NV Energy’s vice president of regulatory, told lawmakers. “AB452 is a shift backwards and a move in the opposite direction we should be taking as a state.”
Protecting customers from price volatility
Currently in Nevada, every dollar NV Energy spends to purchase fuel is passed fully through to customers. Fuel accounts for about one-third of NV Energy customer costs.
Utilities generally produce electricity by burning fuel at a power plant, through renewable sources or by purchasing power from other companies to resell. Nevada law prohibits utilities from profiting from fuel and purchased power costs.
After the utility purchases fuel and provides customers with electricity, it then seeks approval from state energy regulators to bill customers for the already-purchased fuel. The difference between the amount the utility has collected from customers for its estimated fuel costs and how much it actually spent on that fuel is known as a deferred energy adjustment ( DEA ) — customers will sometimes see that credit on their bill.
In 2022, NV Energy saw the price it paid for natural gas — which accounts for more than half of Nevada’s power supply — increase by 70 percent and peak in January 2023, according to Meghin Delaney, spokesperson for the company. The largest rate changes were implemented that month, with customers seeing increases of roughly 2 cents per kilowatt hour on their bills. In 2024, the utility estimated the average Northern Nevada single family residential household used about 765 kilowatt hours of electricity per month, which would have resulted in roughly a $15 per month increase.
But shifting to a cost-sharing model would be overkill and lead to costly hedging strategies, utility representatives argued to lawmakers.
“We do understand the desire to protect customers from commodity price volatility, but … this bill opens the door to risky and costly changes in how Nevada procures and seeks recovery of fuel and purchase power costs,” Wells said.
State energy regulators already review what the utility spends on power, Wells said, adding that they can opt not to approve requested fuel purchases if they find the spending wasn’t prudent.
“Put simply, the existing system works. This bill attempts to provide a solution for a problem that simply doesn’t exist,” Wells said.
Hunter Stern, assistant business manager at IBEW Local Union 1245, which represents union workers employed by NV Energy, echoed Wells’ concern.
“We want to avoid those problems and those harms,” he said.
Proponents point out that the bill doesn’t require the implementation of fuel cost sharing — it only asks state energy regulators to investigate ways to navigate unusual energy price spikes and to study if fuel cost sharing is in the best interest of Nevadans and the utility. State energy regulators would submit a report on their investigation to the Interim Committee on Growth and Infrastructure by July 1, 2026. If they found it in the public interest to enact a rule, then, state energy regulators could act.
“Fuel prices and price volatility are risks that the utilities are in the best position to manage, not customers,” according to the Rocky Mountain Institute, a nonprofit organization focused on the transition to renewable energy. “Under the current system, most utility shareholders don’t feel the pain … The best thing utility commissions could do in this moment is to help make sure some of the risk is shifted to those most in power to invest in solutions.”
Botched billing and increased timelines
Because of its complicated nature, having state energy regulators evaluate finer policy details rather than enacting legislation is a better approach, Wagner told lawmakers. Energy regulators already have the authority to open investigatory dockets such as the one requested by this bill, she said, adding “this really is giving them the nudge to do it.”
Nevada’s State Consumer Advocate and head of the Bureau of Consumer Protection Ernest Figueroa agreed it’s an issue best reviewed by state energy regulators, saying that direction “takes the discussion to the right forum.”
AB452 would also give state energy regulators more bandwidth to scrutinize the utility’s proposals by lengthening the review deadline for certain utility cases.
NV Energy is “flooding” state energy regulators with filings, Christi Cabrera-Georgeson, deputy director of the Nevada Conservation League, told lawmakers.
The utility is required by law to file general rate cases at least every three years, but the utility files much more often than that, she said — it just filed a new general rate case for its Southern Nevada customers immediately after resolving a Northern Nevada rate case. And, the utility regularly amends its integrated resource plans that outline future projects — the company’s 2021 plan was amended five times.
“This level of NV Energy activity with limited regulatory guardrails makes it harder for ratepayers to know what they’re paying for,” she said.
The bill also addresses instances when customers are overbilled by the utility.
In December, KTNV reported that a Southern Nevada resident had been overbilled by NV Energy for six years, paying more than twice the monthly basic service charge. Carlin Dinola received a letter from the utility in December alerting her she’d been overcharged, but she and her husband only received six months’ worth of reimbursement — less than $100 — despite having paid more than $1,100.
The utility told KTNV that it had discovered multiple customers had been charged the wrong rate for their property type. While some customers were overcharged and others undercharged, the utility is not required to perform internal audits addressing appropriate billing classifications for customers, KTNV reported, and an existing utility tariff only requires it to partially reimburse customers.
When asked for more information, Delaney did not elaborate to The Nevada Independent, simply stating the utility refunded them “in accordance with the applicable rules.”
The changes to timelines for state energy regulators and the customer protections would go into effect in July.
“It’s really about the uncertainty of the rates … and how that’s getting passed on to our consumers,” Brown-May said after the bill’s hearing.
“When people don’t like your bill, you probably have a good bill,” she told her fellow lawmakers.
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This story was originally published by The Nevada Independent and distributed through a partnership with The Associated Press.
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