Power companies back off effort to have ratepayers pick up cost of buyout

In a filing with the Public Utilities Commission today, NV Energy and MidAmerican Energy Holdings report that they have reached a settlement agreement with the state Bureau of Consumer Protection that drops previous proposals to have ratepayers pick up half the $2 billion acquisition premium resulting from the deal. Approval by the PUC is still needed.

NV Energy stock was selling for $19.28 a share on May 29 and MidAmerican, owned by billionaire Warren Buffett, offered $23.62 a share the next day. That works out to offering $5.6 billion for $3.6 billion in stockholder equity. Today the stock price stands at $23.80.

NV Energy also agreed to not request an increase in allowed return on equity in excess of 10 percent in any rate case filed in 2014. Nor will the company ask for rate hikes to cover any salary increases for senior management for 24 months following the close of the sale.

In addition NV Energy proposes to offer retail customers $20 million in one-time credits on power bills. That would be a one-time bill credit of about $13 for single-family residential customers in southern Nevada, a one-time bill credit of about $7 for single-family residential electric customers in Northern Nevada and a one-time bill credit of about $2 for single-family residential gas customers in Northern Nevada. The Bureau of Consumer Protection had recommended an immediate $30 million reduction in the rates.

NV Energy also agrees to not seek to recover lost revenues in 2014 for 2013 program costs, nor will the company request recovery of lost revenues in excess of 50 percent of costs in 2015 for 2014 programs.

The company also will make permanent the charges for opting out of the smart meter program.

A hearing on the sale of the company and these details is scheduled for Nov. 18.

NV Energy also disputes claims that its power rates are the highest in the Mountain West, citing figures complied by the U.S. Enegy Information Administration. In August Nevada residential retail electricity cost 11.69 cents per kWh, compared to New Mexico’s 11.82, Arizona’s 11.77 and Colorado’s 11.88. The Californian residential rate was 16.24 cents. Idaho’s rate was 9.21 cents.

11 comments on “Power companies back off effort to have ratepayers pick up cost of buyout

  1. Athos says:

    They’re not going to pass the buy out on to the customers.

    HA HA HA HA HA HA HA HA HA HA HA!!

    I think a little Barnum is appropriate, here, don’t you?? (or was that WC Fields?)

    “There’s a sucker born every minute!”

  2. Wendy Ellis says:

    It’s going to be a lose-lose for NVE customers, AND for NVE employees. Look what happened when Buffett bought Heinz:
    http://www.cnbc.com/id/100962421
    Has anyone noticed a decrease in the price of ketchup? I haven’t.

  3. Vernon Clayson says:

    Didn’t California opt to get some of their energy from green companies here in Nevada or did the green companies all go bust, I can’t keep up.

  4. Wendy Ellis says:

    Copper Mountain. As a “pilot project.” CA is obligated to provide uninterrupted power to customers. Wind and solar just don’t cut it. They have been buying “dirty” electricity from:
    http://blogs.kqed.org/climatewatch/2011/10/19/californias-dirty-secret-the-five-coal-plants-supplying-our-electricity/
    Gotta love those green hypocrites.

  5. Steve says:

    Once Jerry Brown got his latest turn at the governors office he decreed California would not buy any new green energy from out of state. (Hence the failure of the Laughlin plant)
    Ever since, California has been buying fossil sourced power from all over the west and building a ton of instate gas plants along with some solar. The San Onofre nuke plant shut down has put a huge squeeze on power generation in California. Its actually effecting the whole state.

    But they still won’t buy one electron of green power from out of state. In other words they know what dirty power costs and they won’t pay a fraction of cent more for imported energy.

    Laughing at Hairy Weed all the while!

  6. Rincon says:

    So are Nevada rates high or not? Only Idaho is significantly lower and they have a ton of hydro.

  7. Steve says:

    Idaho also has a whole bunch of old power plants. They will be paying for new ones soon. Tom laid out the rates for August, Rincon. Its high.

  8. Wendy Ellis says:

    The price per kWh is the rate for electricity we use. But it is one charge of the several included in what we are billed for. I’d be curious to see the whole picture, when comparing costs among other states. NVE “disputes claims that its power rates are the highest in the Mountain West.” But they cite data from August of 2013. Seems to me they increased residential rates by about 5% on Oct. 1.

  9. […] to the total equity of billionaire owner Warren Buffett’s NV Energy. The PUC currently allows a return on equity of a little more than 10 percent, though the power company has asked for 15 percent for some recent […]

  10. […] to the total equity of billionaire owner Warren Buffett’s NV Energy. The PUC currently allows a return on equity of a little more than 10 percent, though the power company has asked for 15 percent for some recent […]

  11. […] to understand the motive behind the power company’s horse trading. The PUC currently allows a return on equity of a little more than 10 percent, though the power company has asked for 15 percent for some recent […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s