NV Energy makes pitch for digital meters

NV Energy Advanced Service Delivery proposes statewide smart meters and AMI to enable dynamic pricing, time-of-use rates, and demand response, with federal stimulus support, raising questions on rate impacts, cost-benefit, and grid modernization.

Hearings began in the integrated-resource plan that power utility NV Energy has filed with the Public Utilities Commission of Nevada.

At issue during the hearings is the utility's $301 million Advanced Service Delivery initiative, which would replace 1.45 million electric meters across the state with digital meters that would help ratepayers track power consumption and enable NV Energy to charge flexible rates based on peak use.

NV Energy, a Las Vegas-based utility, presented its case, with executives declaring written testimony, and commission staff and companies intervening in the case following up with questions.

If the cross-examinations were any indication, then commissioners, agency staffers, consumer advocates and interveners seem most concerned about how Advanced Service Delivery will affect rates. They also asked several questions about a lower-cost alternative to the initiative and sought to establish that existing metering is reliable and effective.

NV Energy has obtained $138 million in federal stimulus funds to help finance Advanced Service Delivery. The rest of the funding might have to come from higher rates in a future filing with regulators.

Paul Stuhff, a senior deputy attorney general who works for the state Bureau of Consumer Protection, quizzed NV Energy's interim chief financial officer, Kevin Bethel, on whether the utility should be at "risk of recovery" if Advanced Service Delivery's costs exceed its benefits.

Bethel responded that the commission could address Advanced Service Delivery's cost-benefit equation in the utility's next general rate case, scheduled for filing in December 2010.

Stuhff also asked Bethel twice if NV Energy's current metering and distribution system is reliable.

Bethel said it was, and Stuhff answered that "regulatory risk" should come with replacing a system that works.

Stuhff asked Bethel about other major expenses the utility expects to include in its next general rate case.

Investments in NV Energy's $683 million Harry Allen plant in Apex will be among the significant projects included in the general-rate application, Bethel said. Some of the plant's construction costs have already been accounted for in existing NV Energy rates.

Staffers and officials, including Commissioner Alaina Burtenshaw, also pointed to a separate NV Energy contingency plan if the commission doesn't approve Advanced Service Delivery.

The alternative proposal calls for $23 million over three years to augment NV Energy's budget for energy-conservation programs such as Cool Share, a voluntary program through which NV Energy temporarily raises the thermostat in the home during peak hours to conserve energy during high-use periods.

If the commission grants approval to Advanced Service Delivery, NV Energy would run a pilot program involving 10,000 ratepayers to test "dynamic," or variable, pricing based on high-use periods. Ratepayer participation in dynamic-pricing tests would be optional.

The company testified that it has 3,600 consumers signed up for NV Energy's Time of Use program, through which customers can save money by voluntarily reducing power use from 1 to 7 p.m. from June to September.

Also testifying was NV Energy President and Chief Executive Officer Michael Yackira.

Yackira said customers benefit from energy-conservation efforts both as individual ratepayers, because their power bills drop, and as a general group, because of peak-demand reduction.

NV Energy "does not receive direct benefits other than not having to raise capital" to build power plants, Yackira said. "It's a benefit, but an oblique benefit."

Yackira added that NV Energy has enough power-generation capability through ownership or purchasing contracts to provide power at peak consumption without problems or issues.

Commission staff members also asked Yackira whether NV Energy was positioned strategically to address potential federal regulations governing greenhouse-gas emissions.

NV Energy is in a "good" position thanks to investments in "highly efficient" plants that yield less carbon dioxide, as well as investments in renewable energy, Yackira said.

NV Energy's integrated-resource plan is a 20-year outline that details how NV Energy expects to obtain, finance and distribute electricity. Hearings related to another major plan component, a $510 million, 235-mile transmission line to link NV Energy's northern and southern power grids, are scheduled to start June 1.

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