Tell your Legislator to Oppose Bad Utility Bill

I Oppose SB 417

I am writing as a concerned constituent to urge you to vote NO on SB 417 when it comes up for a vote in the Assembly, which allows alternative and formula rates for gas utilities. In a multi-year rate plan, the public utility commission typically authorizes the utility’s rates for several years in a single proceeding. In a formula rate plan, the commission uses the initial case to set the rate and authorize future rate increases for the utility through a calculated formula. Multi-year rate plans are used in other states, and have been linked with increasing costs for consumers. This is because it accelerates cost recovery by encouraging utility spending on capital infrastructure, which drives up rate increases. This type of rate plan shifts the utility’s risk from its shareholders to its customers because it can allow utilities to more easily recover any overspending by the utility from ratepayers. A well-known energy consumer advocate, Paul Alvarez, wrote in the Electricity Journal in 2022 that risk is shifted to customers through formula and multi-year rate-making, stating that such plans create a “moral-hazard situation” because the utility has no incentive to avoid risk when it is protected from any consequences. While alternative rate making can be used in ways that benefit consumers and the environment, SB417 does not provide the necessary protective guard rails. In 2019, the Nevada legislature passed an alternative rate making bill, SB300, for electric utilities. This bill provided guard rails that are missing in SB 417. SB 300 in 2019 also lacked language about formula rates, which is now included SB 417. Formula rates are harmful, and especially inappropriate for gas because of the price fluctuations inherent with gas utilities. Nevada's consumer advocate, a nonpartisan role tasked with protecting ratepayers, testified against this bill because of these key differences between SB 300 in 2019 and SB 417 this session. Ratepayers in Nevada need better protections from gas utility price increases. This bill may well do the opposite. Please vote NO on SB417.