Citing a 130% jump in wholesale future supply prices over the past 12 months and calling for a federal review of wholesale markets, the Nevada Public Utilities Commission late last month approved rate increases between 12.88% and 24.5% for the state’s two major private sector gas distribution utilities, Sierra Pacific Power Co. and Southwest Gas Corp. The increases were effective last Tuesday (Nov. 1). The same wholesale fuel costs prompted regulators also to increase retail electricity rates for Sierra Pacific by $64 million.
In total at an Oct. 27 meeting, the Nevada PUC adopted seven orders in response to what it called “the upward spiral” in wholesale natural gas costs, which have increased 130% in the past year — from futures prices of $6.21/dth last January that this coming January are currently $14.37/dth.
For Sierra Pacific Power gas rates were raised $34 million, or 24.5%, and Southwest Gas rates increased $62 million, or 15.57%, in southern Nevada and nearly $16 million, or 12.88%, in the northern part of the state. “In all orders, the PUC amortized the balances for one year, saving customers a great deal on carrying charges, which are interest charges that accrue when the balance is being reimbursed to the utility,” a PUC spokesperson in Carson City said.
Nevada regulators also approved a regulatory commission-sponsored set of letters to FERC and the Commodity Futures Trading Commission regarding the current natural gas price volatility. The letters were designated to respond to FERC’s and the trading commission’s joint efforts “to bolster confidence and ensure the integrity of natural gas markets.”
In taking its actions, the PUC acknowledged what its called FERC and trading commission efforts “to intensify their actions to protect the market from manipulation,” and it asked their oversight staffs to review the impact of speculation on natural gas prices, along with reviewing the apparent parallel relationship between natural gas and oil price movements.
In other action, the Nevada regulators made permanent a “Consumer Bill of Rights,” adding some modifications since the set of rights was approved last January. It now expands the utility billing and payment options, and protects consumers from shutoffs in the winter months.
Retail electric bills are heavily impacted by the increased gas prices since about 63% of the natural gas consumed in the state is used by electric generation plants.
“Nevada has positioned itself better than some areas due to: (a) the supply basins from which it purchases natural gas; (b) gas pipeline capacity; (c) cost-mitigation practices; and (d) aggressive conservation programs,” said Commissioner Jo Ann Kelly. “The PUC intends to keep vigilant on its oversight to keep natural gas prices as low as possible.”
Nevada regulators also emphasized that last week’s action recognized that wholesale natural gas costs have more than doubled when compared to a year ago, “Approximately 70% of a customer’s winter monthly natural gas is from the dollar-for-dollar pass-through of the wholesale natural gas costs,” the PUC spokesperson said.
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