NV Energy Proposes "Price Stability" Tariff To "Mitigate" Risk of Customers Leaving For Alternative Supply

May 12, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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NV Energy has proposed a "Customer Price Stability Tariff" which the company said will, "significantly mitigate," the likelihood that large customers will choose an alternative supplier

NV Energy said in a whitepaper concerning the tariff that, "Beginning in 2014, 'eligible' customers, directly and indirectly voiced a desire for new energy products and services. Some indirectly expressed their position, either through political or legislative action. Many filed applications under Chapter 704B requesting authorization to purchase energy from someone other than NV Energy (i.e., a provider of a new electric resource or, for the purposes of this document, an 'alternative provider'). The Commission granted several applications; some customers chose to purchase energy from an alternative provider, while most, through the efforts of NV Energy, opted to continue to purchase energy from NV Energy. However, those who chose to continue to purchase energy from NV Energy did so with the understanding that NV Energy would propose the Program being discussed here, which is designed to meet some of their energy procurement goals. Failure to respond to these customers’ demands will once again invite uncertainty into Nevada’s energy landscape and economy."

"Had this later group of customers continued down the path of purchasing energy from an alternative energy provider, the loss of load associated with these customers would have had a negative impact on NV Energy’s remaining customers, particularly the residential rate class. Simply put, remaining customers would have experienced higher costs had more 704B eligible customers exited, a circumstance that this Program will significantly mitigate," NV Energy said

The tariff is proposed to include a fixed-price Energy Resource Rate, as well as a fixed Program Participation Rate (both defined in the tariff), for the base tariff energy rate ('BTER') and deferred energy accounting adjustment ('DEAA'). NV Energy proposed to initially offer the Program with the intention to meet all current customer demand. Future demand for the Program, if any, will be presented to the Commission as the need is identified

The proposed tariff would provide eligible customers with a fixed energy price component, termed the Energy Resource Rate, "for the purpose of providing an increased measure of price certainty to eligible customers."

"The Commission will review and issue an order on each individual customer agreement and it has the ability to extend the Program beyond the five-year term on a customer by customer basis. The Energy Resource Rate has a basis in the solar production costs of the three most recently approved power purchase agreements for the output of renewable energy facilities executed by NV Energy. Through the addition of these significant, low-cost, fixed price renewable resources to its generation profile, NV Energy is able to provide a fixed energy price component to eligible customers, providing them with the ability to more accurately budget for their energy costs over the course of the five year term," the utility said

In addition to the Energy Resource Rate, eligible customers would pay a fixed energy price component, termed the Program Participation Rate. "The Program Participation Rate is designed to offset system costs that should be shared by all customers such as battery energy storage procurement and wholesale market capacity purchases, natural gas transportation charges, excess rooftop solar costs, and legacy renewable energy power purchase agreements. NV Energy will apply a fixed Program Participation Rate based on the average forecast of these unavoidable cost components over the five-year term," the utility said

The following table provides an overview of the fixed five year dollar per megawatt-hour Program Rate.

Eligibility for the tariff would be a non-governmental, fully bundled customer with an average consumption of 8,760 megawatt-hours per year and a load factor of at least 50 percent, or a governmental customer with an average consumption of 8,760 megawatt-hours per year. Under the Program, a customer will enter into a special customer agreement that prices the subscribing customer’s energy and establishes other terms and conditions for participation in the Program. NV Energy will request Commission approval of each customer agreement before it can become effective.

"NV Energy received significant interest in the previous iteration of the Program, when it conducted a solicitation of interest in March 2019. Totaling the demand of all customers indicating interest in the Program results in approximately 3.1 million megawatt hours (2.84 million from Nevada Power customers and 0.26 million from Sierra customers). NV Energy would like to accommodate all customer interest at the Program’s offering, rather than offering several staggered or subsequent offerings, to facilitate an even and holistic administration of the terms and conditions of the Program, and to streamline Program rules and design, as well as NV Energy’s own internal administrative procedures, such as metering, billing, etc. Additionally, this will provide for a more comprehensive examination of the costs and benefits of the Program for consideration by the Commission and respond to the need based on current economic conditions," the utility said

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