Power company customers having their pockets picked coming and going

Reid Gardner coal-fired plant is being shut down early by lawmakers.

My ol’ Pappy used to drawl, “Ya pays ya money and ya takes ya chances, but mostly, ya just pays ya money.”

This appears to be the case with Nevada’s electric power company, NV Energy, which is being swallowed by the maw of Warren Buffett’s MidAmerican Energy Holdings Co.

According to consumer advocates, NV Energy has been sticking it to customers for years with something called “The Transformation,” which has resulted in doubling of company-owned generation capacity — the cost of which is passed on to consumers.

Then there was the company-backed Senate Bill 123 that tosses the company into the briar patch by ordering it to prematurely shutdown coal-fired power plants and build gas-fired and renewable energy generating capacity — the cost of which will be passed on to consumers.

Now, it turns out, MidAmerica is paying an acquisitions premium of $2 billion to acquire NV Energy — and wants to pass along a large portion of that to, you guessed, consumers.

According to testimony presented to the Public Utilities Commission, which putatively regulates the monopoly power company when state lawmakers aren’t usurping that role, NV Energy stock was selling for $19.28 a share on May 29 and MidAmerican offered $23.62 a share the next day.

Dan Jacobsen, a technical staffer at the Bureau of Consumer Protection in the office of the Attorney General, testified to the PUC that customers should not be required to share the acquisition cost as the two merging companies are trying to do.

Jacobsen noted that power company customers are already paying capital costs for company-owned capacity that sits idle half the year. Further, residential customers are picking up an undue share of company costs. Almost half of NV Energy’s revenues come from residential ratepayers who use only a third of the company’s electricity.

Strangely, a number of passages in Jacobsen’s written testimony are redacted, supposedly as trade secrets. “Many confidential Company documents from the application (for merger) indicated that NV Energy is an attractive acquisition candidate because of the opportunity the new owners will have to …” The next 11 lines are blacked out, but apparently the gist of the redacted content is: Stick it to the ratepayers but good.

Redacted testimony before PUC.

Redacted testimony before PUC.

The first line after the redacted matter is: “It seems clear that part of the attractiveness of acquiring NV Energy is the opportunity to further expand rate bases.”

Jacobsen recommends, among other things, an immediate $30 million reduction in the rates NV Energy charges customers. He further recommends delaying the construction of any new capacity until 2020.

He points out the coal-fired units being taken off line near Moapa aren’t being used frequently. The most used unit operates less than 50 percent of the time and one operates no more than 6 percent of the time.

Redacted testimony to the PUC about the cost of SB123

Redacted testimony to the PUC about the cost of SB123

Nevadans already pay the highest rates in the Mountain West and may see even higher rates in the future.

From testimony of Bureau of Consumer Protection before the PUC

From testimony of Bureau of Consumer Protection before the PUC

And who do you think will be expected to pick up the $59 million in cash payments to NV Energy execs after the acquisition?

11 comments on “Power company customers having their pockets picked coming and going

  1. Unlike el Governor hermanito (bro) senor B. SANDOVAL but as new Governor of Nevada after the 2014 gubernatorial election, EDDIE InLiberty HAMILTON will PROTECT the shrinking budget of Nevada families…

  2. Rincon says:

    “He points out the coal-fired units being taken off line near Moapa aren’t being used frequently. The most used unit operates less than 50 percent of the time and one operates no more than 6 percent of the time”. Just asking for a little clarification, Thomas. Coal fired plants are extremely inefficient if not operated continuously. Is it possible that replacing them with plants fired by cheap natural gas would save money in the long run?

  3. Rincon says:

    It also occurs to me, why are these plants not being used to capacity? Poor economy? And of course, if the power company has excess capacity, why install more wind power?

  4. All fossil fuel generation is less efficient when frequently idled. Jacobsen did explain whether the units are used to rapidly start up to meet capacity or are simply left idle during winter months.

  5. Steve says:

    For those in cold climes take note summer is our indoor season and its where we use energy on an equivalent to winters in the north. The only difference is we don’t have to shovel heat.

    I suspect Tom meant to say Jacobsen did not explain rather than did explain. It makes sense to idle generators you intend to take off line soon. Its very true, Nevada does not need any more wind or solar.

  6. iShrug says:

    I read Dan Jacobsen’s testimony yesterday. He is one thoughtful, analytical man. We are paying for additional generation capacity that is totally unnecessary.

  7. Athos says:

    “Ya pays ya money and ya takes ya chances”? How about:

    “Nobody ever went broke underestimating the intelligence of the American public.”!

    Let the gullible who voted for these progressive power mongers, feel the pain! (just like ACA)

  8. […] month ago Hutchison explained that he voted for SB123 — which prematurely closes coal-fired power plants and orders NV Energy to build new plants that […]

  9. […] repeal the 2013 law that requires the shutting down of all coal-fired power plants and deregulate the monopoly […]

  10. […] repeal the 2013 law that requires the shutting down of all coal-fired power plants and deregulate the monopoly […]

  11. […] repeal the 2013 law that requires the shutting down of all coal-fired power plants and deregulate the monopoly […]

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