Implementation of Demand Charge for Southern Nevada Residents

Beginning in April, Southern Nevada residents and small commercial customers will encounter a new "demand charge" on their electric bills. This change stems from NV Energy receiving approval from the Public Utilities Commission of Nevada (PUCN) to introduce a daily demand charge for residential and small commercial users, effective April 16. NV Energy will become the first investor-owned utility in the state to impose a mandatory demand charge on these customer classes, whereas previously, only large customers such as casinos were subject to such charges.

Alongside the introduction of the demand charge, NV Energy received approval to increase its annual revenue to $2.42 billion, which is less than two-thirds of the originally requested $224 million increase. The utility sought this adjustment to recover investments made into its infrastructure. NV Energy is required to finalize its rate calculations by October 1, according to a company spokesperson.

How the Demand Charge Works

Traditionally, utilities have billed customers solely based on the total kilowatt-hours (kWh) used each month. The new demand charge alters this approach by adopting a dual-component billing system that factors in both the customer's highest 15-minute period of electricity usage during the day and the total kWh consumed for the month. To accommodate the demand charge, the per kWh rate will decrease starting in April.

For example, if a customer uses 8 kilowatts between 6:15 p.m. and 6:30 p.m. by operating several appliances simultaneously, the demand charge would be calculated at 18 cents per kilowatt for residential customers. This results in a daily charge of $1.44 for that day (8 kW x $0.18). The total demand charge for the month is determined by adding together the daily charges for each day in the billing cycle.

Customer and Advocacy Group Responses

The utility asserts that the demand charge will incentivize customers to distribute their use of high-demand appliances, such as clothes dryers and pool pumps, throughout the day. However, if a customer uses multiple high-demand items simultaneously, the demand charge for that day will increase.

This new billing method has drawn criticism from customers and energy advocacy groups, who describe it as "complex" and "convoluted." George Cavros, Nevada clean energy manager and senior attorney at Western Resource Advocates, expressed concern that the demand charge is difficult for customers to understand and may hinder effective rate design and decarbonization efforts in the state. He noted that many residents already struggle with utility bills and that the new system will add further confusion.

During a consumer session held on June 5, Marlon Anderson, a longtime NV Energy customer, argued that the demand charge appears intended to "confuse and punish regular people." He highlighted the unpredictability of bills and warned that added complexity would disproportionately affect senior citizens, low-income families, and those living paycheck to paycheck, ultimately increasing bills and limiting access to solar energy.

In response to these concerns, NV Energy announced plans to launch a comprehensive customer education and communications initiative to help customers understand the demand charge and how it will affect their bills.