December 19, 2023
CARSON CITY, NEVADA – The Public Utilities Commission of Nevada voted yesterday to approve a simplified Time of Use (TOU) rate structure for Nevada Power Co. customers in a regulatory proceeding called a General Rate Case, which is how customer energy rates are set. Generally, TOU rates allow a utility to charge customers different rates for energy at different times of the day. For example, customers would pay more for energy during the evening hours when demand increases. This creates valuable price signals encouraging customers to use energy during times of the day when it’s cheaper and easier for the utility to serve customers. Benefits of TOU rates include lower overall costs for customers, increased reliability of the grid, while reducing demand for more expensive resources.
In the General Rate Case, Nevada Power proposed a new voluntary TOU rate with an on-peak period between 3 to 9 p.m., every day from June through September. Western Resource Advocates (WRA) and Southwest Energy Efficiency Project (SWEEP) proposed an alternative peak of 6 to 9 p.m. during that same time period. WRA and SWEEP designed this alternative to incentivize energy shifting and achieve cost and reliability benefits, but also to make the rate far more attractive for customers.
This is a huge win for residential customers of Nevada Power Company. Time of Use rates have the potential to help individual customers save money, increase reliability benefits on the system as a whole, and make it easier to incorporate clean energy resources onto the grid. By approving a shorter on-peak period for the new residential rate, more customers are likely to sign up for it, which will significantly expand these benefits.
NV Energy, parent company of Nevada Power, has offered various TOU rates for decades, but they have never had more than 1% of eligible customers participate. In fact, at the moment, only 0.63% of eligible customers are enrolled in the currently available TOU rate. This low participation indicates that customers are not attracted to sign up for this rate, likely because it is too difficult to shift energy use during a six-hour timeframe at the end of the workday.
“Utility regulators have taken important steps to fix the ways that NV Power customers are charged for electricity. These changes are long overdue,” said Justin Brant, Director of SWEEP’s Utility Program. “Thanks to the much improved and more flexible rate options, customers will be better able to manage the cost of living in Nevada while providing much-needed services to the grid.”
There are many other successful Time of Use rates around the West focused on giving customers more control through shorter on-peak periods. This is clearly a more attractive rate structure in other areas of the country, and the Commission agreed with WRA and SWEEP. In its draft order, the Commission says that it “believes this type of rate structure sends the appropriate price signals to TOU customers during peak hours and therefore will encourage more residential customers in the state to take service under TOU rate schedules.”
This decision will take effect on January 1, 2024.
Contact:
James Quirk, 908-902-3177, james.quirk@westernresources.org
