NVE Comments 07.22.15
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Transcript of NVE Comments 07.22.15
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BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA
IN THE MATTER of the Emergency Petition of The Alliance For Solar Choice for a Declaratory Order that Senate Bill 374 Requires Continuous and Uninterrupted Net Energy Metering be Offered to Customer Generators in Nevada
) ) ) ) )
Docket No. 15-07021
COMMENTS REGARDING AND ANSWER TO EMERGENCY PETITION FOR DECLARATORY ORDER
Pursuant to the July 17, 2015 Notice of Petition for a Declaratory Order, Nevada Power
Company d/b/a NV Energy (Nevada Power) and Sierra Pacific Power Company d/b/a NV
Energy (Sierra Pacific and, together with Nevada Power, NVE or the Companies)
submit these Comments Regarding and Answer to the Emergency Petition for a Declaratory
Order (the Petition) filed by The Alliance For Solar Choice (TASC). The Petition requests
an order regarding the meaning of Senate Bill (SB) 374. Specifically, TASC asks the Public
Utilities Commission of Nevada (Commission) to issue a declaratory order requiring the
Companies to continue to offer net energy metering under the currently effective net metering
tariff until such time as the Commission approves a new net metering tariff. This specific
request from TASC should be rejected. I. INTRODUCTION
A. TASC stated that, under SB 374, no more than 235 MW of customer-generation would be served under existing net metering rules
One objective of SB 374 is clear as expressed by TASC to legislators and the public,1
SB 374 was designed to provide the Commission with wide latitude to establish a smooth
transition between current net metering rules (NEM1) and new, sustainable net metering
rules to become effective on or before December 31, 2015 (NEM2). According to TASC, SB
1 Assembly Commerce and Labor, May 25, 2015. Written minutes of the hearing are not available from the
Legislative Counsel Bureau. However, the hearing was videotaped. Mr. Uithovens remarks begin at minute 11:42 at the following link: http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=5022. See also, the joint
press release issued on May 25, 2015 by TASC and NVE, attached hereto as Answer Exhibit A.
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374 defined the existing 3 percent net metering cap to be 235 megawatts,2 which is the
maximum amount of net metering permitted under the current net metering rules until
December 31, 2015.3 SB 374 identifies the single, specific scenario under which NEM1
would remain in place after NVE has accepted applications for 235 megawatts under NEM1:
only if the Commission fails to finalize NEM2 rules by December 31, 2015.4 The Petition
seeks relief that is inconsistent with the text of SB 374 and TASCs description of the
legislation. Equally important, the relief requested by TASC would not provide for a smooth
transition from NEM1 to NEM2.
B. NVE will propose a transition mechanism in its July 31, 2015 filing
In contrast, the Companies July 31, 2015 filings will propose a mechanism for
efficiently transitioning from NEM1 to NEM2 consistent with the latitude afforded the
Commission under SB 374 to craft and implement a NEM2 program. First, consistent with SB
374, the NVE Companies will continue to interconnect customer-generators under NEM1 until
it accepts and approves applications from 235 megawatts of customer-generators. Second,
again consistent with SB 374, thereafter the NVE Companies proposal will be to continue
accepting applications from customers requesting the interconnection of renewable distributed
generation and the installation of a net meter. Third, consistent with SB 374, the filing will
include a marginal cost of service study and a new NEM2 tariff, providing the Commission the
data to evaluate NEM2 rules. Fourth, consistent with SB 374, the Companies will request
permission from the Commission to begin billing customers under the proposed NEM2 tariff at
an appropriate time before December 31, 2015, 5
subject to refund in the event that the final
NEM2 tariff provides NEM2 customers with a more advantageous rate.
2 Answer Exhibit A.
3 Id.
4 Id. See also, Subsection 5 of section 4.5 of SB 374 (requiring that, for the period beginning January 1, 2016, the
companies must offer net metering under existing rules if the Commission has not issued an order approving new
net metering rules). 5 The Companies are making the system changes necessary to begin billing NEM2 customers, with the goal of
being in a position to start billing under NEM2 rules and rates as soon as September 15, 2015.
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The Companies forthcoming proposal is consistent with SB 374 and furthers Nevadas
energy policies. Under the proposal, customer-generators may continue to submit
interconnection and net metering applications and the renewable distributed generation
industry may continue to install such systems, without interruption. The proposal provides an
organized process for transitioning from NEM1 to NEM2, without interruption to the sales and
fulfillment processes. The proposal thus will achieve TASCs stated objectives in a manner
that is consistent with legislation that TASC supported.6 Ultimately, the transition to NEM2
will allow further growth in distributed generation, while ensuring that customers without these
systems will not continue to subsidize net metering.
C. Consistent with the preference established by Section 4.5 of SB 374, NVE will propose a just, reasonable and fair billing regime for NEM2 customers that eliminates the unreasonable shifting of costs to customers who do not choose to install rooftop solar systems.
Subsection 3 of Section 4.5 of SB 374 establishes a preference for the NEM2 billing
regime. The preference established by the law is for a three-part rate that consists of a basic
service charge, a demand charge, and an energy charge. These charges will be based on the
specific costs that NVE incurs to provide electric service to customers who install intermittent,
renewable generation. Pursuant to SB 374, the basic service charge will reflect marginal fixed
costs incurred to provide safe and reliable service to customer generators. These costs include
back-office systems (e.g., accounting, billing, and customer service systems), employees,
meters and the terminals, transformers, and wires that are closest to the customers premise.
These costs do not vary based on the amount of electricity a customer consumes. Pursuant to
SB 374, the demand charge will reflect the maximum load requirement that a customer-
generator places on the system, including the need to accommodate energy delivered by the
customer-generator.7 The demand charge will reflect the Companies investment in the
6 Assembly Commerce and Labor, May 20, 2015. Written minutes of the hearing are not available from the
Legislative Counsel Bureau. Mr. Lyndon Rives remarks regarding the industrys concern regarding the transition between NEM1 and NEM2 begin at hour 3:17:00 at the following link:
http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959 7 That is, the demand charge will reflect the cost of provide the specific service that a customer-generator receives,
which includes both stand-by service and energy receipt service.
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generation, transmission, and distribution facilities that are needed to ensure the delivery of
reliable service to customer-generators. Again, pursuant to the SB 374, the energy charge will
reflect the volume of energy consumed by a customer. Energy costs, such as fuel and
purchased power, typically vary based on consumption.
The three-part rate is neither new nor novel. The Companies and utilities across the
country have offered three- and multi-part rate structures to commercial customers. Indeed, the
Companies have used a three-part rate structure to bill commercial accounts for more than six
decades. A three-part rate design better reflects the cost of providing electric service, is well-
established and provides a fair and reasonable way to recognize the cost of serving customer-
generators.
In this vein, NVEs July 31, 2015 filing will further the policy of SB 374. The filing
will propose just, reasonable and fair rates that reflect the cost of providing service to
customers who choose to install variable distributed generation. Not only will the proposal
eliminate the unreasonable shifting of costs from customer-generators to other customers, but
the filing will propose rules that fairly compensate customer-generators for any capacity and
energy benefits associated with their systems. In summary, the filing will seek to establish a
sustainable environment for renewable distributed generation one that treats all customers
fairly and one that recognizes that the inherent subsidy utilized to promote distributed
generation is no longer needed to ensure the growth of renewable distributed generation.
II. THE COMPANIES WILL CONTINUE TO ACCEPT APPLICATIONS FROM
CUSTOMER-GENERATORS AND REQUESTS TO INSTALL NET METERS AFTER THE 235 MEGAWATT LIMITATION SUPPORTED BY TASC IS REACHED.
Subsection 1 of section 2.3 of SB 374 provides: Except as otherwise provided in subsection 3, each utility shall, in accordance with a tariff filed by the utility and approved by the Commission, offer net metering to customer-generators who submit applications to install net metering systems within its service territory after the date on which the cumulative capacity requirement described in paragraph (a) of subsection 1 NRS 704.773 is met.
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While subsection 2 of section 2.3 allows the Commission to establish enrollment limitations
under the NEM2 tariff, NVE does not anticipate asking for a capacity limitation on NEM2 in
its July 31, 2015 filing.8 Accordingly, the Companies will propose to continue to accept
applications requesting interconnection of on-site renewable generation and the installation of
net meters after the 235 megawatt-limitation on NEM1 described in the statute is reached.
NVE also will ask the Commission to allow it to begin billing NEM2 rates at an appropriate
point before December 31, 2015.
III. SB 374 ALLOWS THE COMMISSION TO DETERMINE WHETHER AND HOW TO TRANSITION BETWEEN NEM1 AND NEM2
The Petition asks the Commission to issue an order requiring the Companies to offer
net metering under existing rules until the Commission approves the NEM2 tariff. As
explained above, the Companies will provide a solution in their July 31, 2015 filing. The only
matter at issue is how the Companies will bill new customer-generators after the 235
megawatt-limitation. That matter is intended to be resolved by the Commission in accordance
with the process outlined in SB 374.
Subsection 1(a) of Section 2.95 of SB 374 provides that until the 235 megawatt cap is
reached, customer-generators will be charged under the NEM1 rules.9 Then, subsection 1(b) of
Section 2.95 requires the Companies to offer net metering in accordance with a new net
metering program and tariffs (NEM2) filed with and approved by the Commission.10
To move
from NEM1 to NEM2, section 4.5 of SB 374 requires the Companies to file cost of service
studies and NEM 2 tariffs with the Commission. To facilitate the transition from NEM1 to
8 Subsection 2 of section 2.3 provides, in relevant part, the Commission . . . [m]ay close to new customer-
generators a tariff filed pursuant to subsection 1 and approved by the Commission if the Commission determines
that closing the tariff to new customer-generators is in the public interest. 9 Subsection (a) provides, In accordance with the provisions of this Section, NRS 704.774 and 704.775, to the
customer-generators operating within its service area until the date on which the cumulative capacity of all net
metering systems for which all utilities in this State have accepted or approved completed applications for net
metering is equal to 235 megawatts. 10
Subsection (b) provides, After the date on which the cumulative capacity requirement described in paragraph (a) is met, in accordance with the tariff filed by the utility and approved by the Commission pursuant to section
2.3 of this act.
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NEM2 in a transparent manner, the Companies will ask the Commission to permit billing of
the NEM2 rates at an appropriate point before December 31, 2015.
Because the date upon which the 235 megawatt limitation will be met was (and is)
uncertain, the May 20, 2015 version of SB 374 provided a bridge between the NEM1 and
NEM2 programs in the form of a temporary tariff to be applied in the event the cumulative
capacity of all net metering systems reached 235 megawatts prior to the final approval of
NEM2 tariffs. This approach was opposed by representatives of the largest competitors of the
solar industry.11
The final version of SB 374, which was expressly supported by TASC,
exchanged the temporary tariff transition mechanism described in earlier iterations of the bill
for a transition process to be determined by the Commission, should the Commission
determine that transition process is necessary.12
In the final version of SB 374, the Commission
is charged not only with approving the NEM2 tariff, but with establishing the mechanism for
transitioning between NEM1 and NEM2 in the event that the cumulative capacity of all net
metering systems reaches 235 megawatts before the final approval of the NEM2 tariff. In the
final version of SB 374 the Commission will make these assessments based on information
filed first by the NVE Companies on July 31, 2015, along with the information it receives from
participants in that proceeding, concluding no later than December 31, 2015.
TASCs proposal is inconsistent with the process and time table set forth in SB 374 for
determining whether and how, in the event that the cumulative capacity of all net metering
systems reaches 235 megawatts before the final approval of NEM2, to transition from NEM1
to NEM2. TASC asks the Commission to require NEM1 to continue even after the 235
11
Assembly Commerce and Labor, May 20, 2015. Written minutes of the hearing are not available from the
Legislative Counsel Bureau. Mr. Lyndon Rives remarks describing the industrys opposition to the temporary tariff transition mechanism begin at hour 3:17:00 at the following link:
http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959 12
Subsection 1 of Section 4.5 provides that in lieu of the temporary tariff approach opposed and rejected by the
solar industry, the Commissions consideration of the process for transitioning from NEM1 to NEM2 will begin with the filing on July 31, 2015 of the NEM2 tariff and a cost of service study. Subsection 2 of Section 4.5
describes the minimum terms of the NEM2 tariff. Subsection 3 of Section 4.5 describes the role of cost of service
analysis to be used in determining rates for service in the NEM2 tariff. Subsection 4 of Section 4.5 describes the
review that the Commission will undertake in approving, modifying or not approving the NEM2 tariff, and
provides that the Commissions review will be completed no later than December 31, 2015.
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megawatt-limitation is reached, which is prohibited by subsection 5 of section 4.5 of SB 374.
13
The relief requested by TASC is unnecessary, prohibited by SB 374, and inconsistent with
TASCs public statements describing SB 374.
IV. TASCS ASSERTION THAT SB 374 REQUIRES NEM1 TO REMAIN IN EFFECT UNTIL NEM2 IS APPROVED IS CONTRARY TO THE PLAIN LANGUAGE OF THE STATUTE, THE NEM1 TARIFF AND TASCS TESTIMONY BEFORE THE 2015 LEGISLATURE
TASC asserts that SB 374 provides that NEM1 will remain in effect and apply to all
new net metering applications, including net metering applications received after the 235
megawatt cap is reached. TASC argues that, in the absence of any new tariff, the applicable
tariff is the existing NEM tariff that has been filed by the Companies and approved by the
Commission.14 This argument is inconsistent with the plain language of SB 374, which
defines the single situation under which NEM1 rules will become effective after the 235
megawatt cap is reached.
TASCs argument also is inconsistent with the plain language of the NEM1 tariffs.
Those tariffs expressly provide that [t]his Rider will close when the cumulative generating
capacity of Net Metering Systems operating in Nevada equals three percent of the total annual
peak capacity of all Utilities in Nevada. As stated by TASC, SB 374 defines the existing 3
percent net metering cap to be 235 megawatts.15 By their own terms, the NEM1 tariffs close
when the Companies accept and approve applications from customer-generators for 235
megawatts.
13
Subsection 5 of section 4.5 of SB 374 provides:
Except as otherwise provided in subsection 6, if for any reason the Commission does not
approve a tariff as required by subsection 4 on or before December 31, 2015, and
notwithstanding the amendatory provisions of this act to the contrary, for the period beginning
January 1, 2016, and ending on the date on which the Commission approves a tariff pursuant to
section 2.3 of this act, a utility shall offer net metering to customer-generators in a manner
consistent with the provisions of NRS 704.773, 704.774 and 704.775 as those sections existed
before the effective date of this act.
(Emphasis added) 14
TASC Emergency Petition, p. 10, lines 18-19. 15
Assembly Commerce and Labor, May 25, 2015. Written minutes of the hearing are not available from the
Legislative Counsel Bureau. Please refer to Mr. Uithovens introduction of the final version of SB 374 beginning at minute 11:42 at the following link: http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=5022.
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Finally, TASCs position is inconsistent with TASCs description of the operation of
the final version of SB 374. On May 25, 2015, TASC representative Robert Uithoven appeared
before the Assembly Committee on Commerce and Labor to support the ultimate version of SB
374, a consensus version to which TASC expressly agreed. On behalf of TASC, Mr. Uithoven
introduced the compromise legislation and stated unequivocally that the current net metering
program and tariff would apply only up to the 235 megawatt cap.
In a sense this amendment will one, define the existing 3 percent net metering cap to be 235 MW. This 235 MW will be the maximum amount of net metering permitted under the current net metering rules until December 31
st of this year, 2015. The amendment will also require that
the Public Utilities Commission of Nevada design a future net metering tariff with wide latitude for the Commission to structure that new tariff. And finally the amendment will require the Commission to finalize the new tariff by the end of this year December 31, 2015. Should the Commission not meet this deadline the existing net metering tariff will remain in place until the Commission finalizes the new tariff.
16
A few moments later Assemblyman Nelson asked Mr. Uithoven you said you know
what you are agreeing to . . . if you bump up to that [235-MW limitation], youre going to live
with that right?17 Mr. Uithoven stated that there was disagreement between the parties
presenting the compromise version of SB 374 as to whether 235 megawatts represented three
percent of load, and when the cap would be reached. Mr. Uithoven then stated, We are
confident in our agreement, and we are here testifying in favor of the agreement we made with
NV Energy. Finally, Mr. Uithoven agreed that, if a tariff were in place, then the limitation
would be academic.18 The compromise that resulted in the final version of SB 374 did not
eliminate the need to establish a plan for transitioning between NEM1 and NEM2: it left the
responsibility for establishing the transition plan to the Commission.19
16
Id. (emphasis added). 17
Id. 18
Id. 19
If the Commission does not have the power to establish a transition plan, then, as TASC stated, 235 MW is the maximum amount of net metering that will be installed under NEM1.
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V. NVE DID NOT MISLEAD THE LEGISLATURE, THE INDUSTRY, OR THE
PUBLIC
NVE did not mislead the Legislature, the industry, or the public with respect to when
the 235 megawatt-cap would be reached. During the 2015 legislative session, the renewable
distributed generation industry and NVE disagreed about when the three percent cap on
installed net metering capacity, which had been in place since 2013, would be reached. Even
though the industry acknowledged that it was experiencing massive growth,20 and believed
the cap might be reached before December 31, 2015, the industry also stated that reaching the
limitation was unlikely.21
Notwithstanding this understanding, the industry agreed that no more
than 235 megawatts of customer-generators would be served under NEM1, indicated that it
understood its agreement, and committed to live with its agreement.
NVE presented its estimate to the legislature based on both the then existing rules,
which focused on installed capacity, as well as the growth rates applicable in 2014 and early
2015. The concept of a cap based on reserved or pipeline capacity was not established until
SB 374. The previous version of NRS 704.773 established a three percent net metering cap for
operating projects, not reserved projects. Thus, NVE had systems in place to report operating
capacity. NVE first attempted to calculate pipeline capacity for reserved projects during the
week of April 27, 2015. As the discussion evolved through the session, NVE continued to
refine the calculation procedure for pipeline projects in order to provide the best estimate
possible. Throughout the entire process, NVE provided these numbers based on the best
available information it had at the time.
The 17.5 megawatt counting error that was discovered and reported to the industry by
NVE on or about June 22, 2015 consisted entirely of pipeline projects. Over the last several
months, the pipeline has been fluid and rapidly growing. NVE had robust reporting systems in
place to report operating capacity.
20
Testimony of Lyndon Rive, http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959 21
Id. at approximately 3:24:45 (lets just say in the unlikely event the industry hits the cap in call it October) & 3:36:30.
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The Petition references the information provided by NVE as part of Docket 14-06009.
There, NVE provided a projection based on installed capacity, not pipeline capacity, and the
plain language of that response denotes this fact. The same reporting systems were not in place
for pipeline capacity because this capacity had not previously been a part of any reporting
requirement for compliance. This new pipeline reporting process was being developed
concurrently with the discussions occurring around SB 374. It is consequential to note that
prior to the deliberations around SB 374, the projected number of projects and associated
energy was of virtually no consequence. The notion that NVE hid numbers that heretofore had
no meaning or consequence is incorrect.
The Petition also references the legislative testimony and an exhibit provided on May
20, 2015. This exhibit provides an update to the forecast of operating capacity provided in
Docket 14-06009. Again, the update revised the forecast of operating capacity using the then-
current installation rate. This rate was lower than the installation rate forecasted in Docket 14-
06009 operating capacity forecast. NVE considered this reasonable; in large part because
industry leaders had indicated that it could not sell systems any faster.22
The actual operating
capacity additions from January through April are denoted on that forecast.
NVE provided information regarding projects in the pipeline in the footnote,
indicating that a reservation capacity could be hit in March 2016. The 6.8 megawatts per
month growth rate assumption is stated. The assumption was based on historical information
and supported by the chart shown in the exhibit.
Forecasts necessarily are based on assumptions, and assumptions may prove to be
wrong. But NVE presented the assumptions used to create the forecast attached to the Petition
a clear and transparent manner for Legislators and stakeholders. The Petition highlights the
nature of the difference between the forecast growth and actual growth rates seen over the
previous several weeks. The error that was later found plays a minor role in when the cap will
22
See id. at approximately 3:33:50.
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be hit in comparison to this growth rate.
23 The forecast assumption of May 20, 2015 was 6.8
megawatt per month, spelled out by NVE and part of the public record for TASC members to
consider. The point is that the 17.5 megawatt counting error is not material to the forecast
discussion. Given the current rate of applications being received by the Companies, with or
without the 17.5 megawatt of additional capacity, the industry will hit the 235 megawatt limit
well before that date the NEM2 tariff is required by statute to be put in place by the
Commission.
Finally, NVE has no control over the sales rates of the industry.24
The industry controls
the pace at which sales grow and, as it acknowledged during the 2015 Legislation session, has
the option of plateauing and avoiding the cliff.25 Instead, the industry has rushed forward
making sales at approximately 20 megawatt per month. Any assertion that NVE acted in a
deceptive or misleading manner is short on the facts. The industry has actual knowledge of the
current and future growth rate. That knowledge should have been a critical factor in deciding
whether or not to support SB 374 and agree that no more than 235 megawatt of customer-
generators would be served under NEM1 in light of the clearly stated assumption that NVE
based its forecast on 6.8 megawatts per month.
VI. CONCLUSION
The relief requested by TASC bypasses the procedure established in SB 374 pursuant
to which the Commission will determine whether and how to transition from NEM1 rules to
NEM2 rules. The relief requested by TASC is contrary to the plain meaning of the statute,
Nevada Power and Sierra Pacifics NEM1 tariffs, and TASCs testimony before the 2015
Nevada Legislature and public statements. The emergency petition filed by TASC on July 8,
2015 is procedurally deficient. The emergency petition filed by TASC should be rejected.
23
The difference between the industrys actual growth rate from May 1, 2015 on, and its historical growth rate of 6.8 MW of additions per month eclipses the 17.5 MW error in a few weeks 24
The industry, which controls the level of sales and sales growth, called its recent growth massive. http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4959 at approximately 3:18:30. 25
Id. at approximately 3:33:00
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Dated this 22nd day of July, 2015.
Respectfully submitted, NEVADA POWER COMPANY SIERRA PACIFIC POWER COMPANY
/s/Elizabeth Elliot Elizabeth Elliot Associate General Counsel Nevada Power Company 6100 Neil Road Reno, NV 89511 775-834-5694 [email protected]
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ANSWER EXHIBIT A
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CERTIFICATE OF SERVICE
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CERTIFICATE OF SERVICE
I hereby certify that I have served the foregoing NEVADA POWER COMPANY D/B/A NV
ENERGYS AND SIERRA PACIFIC POWER COMPANY D/B/A NV ENERGYS
COMMENTS in Docket No. 15-07021 upon the persons listed below by the following:
Tammy Cordova Public Utilities Comm. of Nevada 9075 West Diablo Drive Suite 250 Las Vegas, NV 89148 [email protected]
Staff Counsel Division Public Utilities Comm. of Nevada 1150 E. William Street Carson City, NV 89701-3109 [email protected]
Eric Witkoski Michael Saunders Attorney Generals Office Bureau of Consumer Protection 10791 W. Twain Ave., Ste. 100 Las Vegas, NV 89135-3022 [email protected] [email protected]
Attorney Generals Office Bureau of Consumer Protection 100 N. Carson St. Carson City, NV 89701 [email protected]
Jacob Schlesinger (TASC) Keys Fox & Wiedman LLP 1400 16th St. 16 Market Sq. Ste. 400 Denver, CO 80202 [email protected]
DATED this 22nd day of July, 2015. /s/ Janice Baldarelli Janice Baldarelli Legal Assistant Nevada Power Company Sierra Pacific Power Company
Comments - TASC Petition-jb_grayTAB answer exh AAnswer Exhibit A_resized_grayTAB CERTcert of svc