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Senate hears competing testimony on allowing alternative rate-making for natural gas utilities
Summary
Senate Bill 417 would permit natural gas utilities to apply to the Public Utilities Commission of Nevada for alternative rate-making plans — optional mechanisms that proponents say can smooth rate changes and reduce administrative costs.
Senate Bill 417 would authorize natural gas utilities regulated by the Public Utilities Commission of Nevada to apply for alternative rate-making plans — an option that electric utilities have had under prior law — and would direct the commission to adopt implementing regulations.
Southwest Gas representatives presented the bill and an amendment, saying the measure mirrors the 2019 law that made alternative rate-making available to electric utilities (SB 300) and would give gas utilities the same optional regulatory tool. "Alternative rate making creates more predictable rate changes and lowers administrative costs for the PUCN," Scott Leedom, director of regulation and public affairs at Southwest Gas, told the committee. He said the bill preserves the PUCN’s full authority over rates and leaves to the commission the ability to approve, modify or deny any plan.
Leedom and other proponents described mechanisms that might be used under alternative rate making: formula rates, earnings-sharing mechanisms, and performance-based components tied to service or policy goals. They said the approach can reduce the frequency and size of discrete rate shocks and pass administrative savings to customers.
Multiple business groups and some utilities testified in support, citing predictability and administrative efficiency. NV Energy said it supports the concept as amended and described customer-assistance programs and a proposed low-income rate in its upcoming general rate case. Industry supporters included the Vegas Chamber, Nevada Manufacturing Association, Nevada Trucking Association and local chambers.
Several consumer-advocacy, conservation and energy-efficiency groups opposed the bill. Ernest Figueroa, Nevada Consumer Advocate in the Attorney General’s Bureau of Consumer Protection, said the bill differs from SB 300 and contains provisions that may tilt outcomes toward utilities and away from ratepayers. He and other opponents warned formula or multi-year rate plans can reduce commission scrutiny of utility investments and shift more risk and cost to customers. Environmental and ratepayer advocates urged waiting until Nevada’s newly required gas integrated resource-planning process (SB 281 from the 2023 session) has run for its initial cycle — the first IRPs are due Oct. 1 — before authorizing alternative rate-making tools for gas utilities.
Public Utilities Commission general counsel Garrett Weir said the commission appreciated early outreach from Southwest Gas and would be available to answer implementation questions; he noted regulations for electric utility alternative rate-making were developed in a formal rulemaking process and said the commission would be expected to fill a similar role here.
Both sides urged continued negotiation. Opponents cited experiences from other states where formula or multi-year plans were associated with rate increases for customers, while proponents emphasized the bill puts the final decision with the PUCN and would be optional for utilities.
The committee closed the hearing on SB 417; the transcript records extensive testimony from both sides and the commission, and no committee vote occurred during the heard session.
