LAS VEGAS (KLAS) — NV Energy is proposing a plan to charge customers in their monthly bills to establish a wildfire self-insurance fund, according to a Tuesday news release.
The cost to customers — more than 1.5 million in Nevada — would depend on where they live. Southern Nevada ratepayers would be charged about 50 cents each month, while customers of Sierra Pacific Power in Northern Nevada would pay about $2.40 each month. Northern Nevada customers face a higher risk of wildfire.
The Public Utilities Commission of Nevada (PUCN) would have to approve the plan before NV Energy can collect from customers. Links to the proposal on the PUCN website failed to show documents on Tuesday afternoon.
Customers don’t have a choice to opt in or opt out if the company’s self-insurance plan is approved. They will be billed each month. Like private insurance, a self-insurance program collects from a large number of people to pay claims made when a smaller number of people incur damage.
As the fund builds up, it would be invested to produce higher returns.
According to Tuesday’s news release, the funds would be collected for 10 years.
“Wildfires across the United States are becoming more frequent and severe, and utilities like NV Energy must proactively manage wildfire related risks to protect customers and the communities we work to safely serve every day,” NV Energy President and CEO Doug Cannon said.
“While NV Energy remains committed to taking actions to reduce the risk of a wildfire occurring in connection with our electric grid, as other utilities in the West have recognized, a self-insurance approach ensures that there is financial support in place in advance of a wildfire occurring to provide greater financial certainty to all involved.”
Utilities — notably California’s Pacific Gas & Electric (PG&E) — have moved to create self-insurance funds after enormous liabilities connected to destructive wildfires. PG&E is generating $400 million per year from its customers to cover self-insurance for third-party wildfire claims of less than $1 billion per year, according to a document detailing a Jan. 12, 2023, decision.
Costly wildfires have driven up private insurance costs, prompting utilities to come up with more affordable options.
8 News Now has reached out to NV Energy about variable rates. Wildfire risks on Mt. Charleston are higher than in the Las Vegas suburbs, but no information was provided initially on how those rates might differ.
“NV Energy’s proposed fund will be built through additions to customer rates and a co-payment from shareholders and invested to grow over time. This approach ensures that 100 percent of the funds are available to support customers and the communities we serve in the event a covered catastrophic wildfire were to occur,” according NV Energy’s news release.
NV Energy and Sierra Pacific Power are company names used by Nevada Power, which serves both sets of customers.
