Nevada law sets rules for gas and electric utility rate plans

The Public Utilities Commission of Nevada must adopt rules for natural gas utilities to apply for alternative rate plans. A natural gas utility is a public utility that buys natural gas for resale. The rules must set which rate methods utilities may use and any limits, required application information, customer education, recordkeeping, and standards for reviewing plans. A plan using formula rates or lasting more than 36 months must include a way to share utility earnings with customers and explain how changes in utility risk affect customer rates. A utility may apply only after the commission first adopts the required rules.

A natural gas utility may apply to use an alternative rate plan, and the commission must hold public sessions before deciding whether to approve it. The utility must hold a consumer session in each major geographic area it serves. It may apply with a general rate application or within six months after the commission approves one. The commission may approve a plan only if it serves the public interest, protects customers, produces just and reasonable rates, meets commission criteria, states its duration, and includes a customer education plan. The commission generally has 210 days to decide and may extend that period by up to 90 days for good cause. If it does not decide in time, the application is denied. If the commission changes the plan, the utility may reject it within 30 days. The commission may later investigate and change rates or practices under the plan after a hearing. The utility may apply with a general rate application or within six months after the commission approves one.

A utility with an alternative rate plan using formula rates or a multi-year rate plan must include customer earnings sharing and an analysis of how utility risk affects rates. This applies when an electric utility applies for an alternative rate plan that includes formula rates or a multi-year rate plan. The plan must include a way for the utility to share earnings with customers. The plan must explain changes in the utility’s risk and calculate how those changes affect the utility’s allowed return and customer rates.

A utility whose alternative rate plan allows it to charge customers for a capital investment must prove the investment was prudent; otherwise, the commission must order a refund. This applies to natural gas and electric utilities whose alternative rate plans allow recovery of capital investment costs. The utility must prove the investment was prudent when it files a general rate application or at another time set by commission rules. The commission must order repayment of amounts already charged if, during a general rate case, it finds the utility did not prove the investment was prudent. The utility must prove prudence when it files a general rate application or at another time set by commission rules; a refund follows a finding in a general rate case.