## Facts

- Sierra Pacific Power Company, doing business as NV Energy (Sierra Pacific), filed an application with the Public Utilities Commission of Nevada (PUCN) seeking authority to adjust its annual revenue requirement and general rates charged to all classes of electric customers.
- As part of that filing, Sierra Pacific requested permission to include an additional 6 megawatts (MW) of rooftop-solar generation capacity in Nevada’s net energy metering (NEM) program.
- NEM affects customer billing by providing bill credits to customer-generators for electricity exported to the grid.
- Evidence indicated the additional 6 MW would reduce the average residential customer’s bill by about $0.01 per month.
- The record also indicated the additional NEM capacity could shift about $0.26 per month in costs from NEM customers to non‑NEM customers (a contested estimate that was central to the dispute).
- For the average small commercial customer, the additional 6 MW was projected to decrease the average bill by about $0.43 per month.
- Expert testimony and reports conflicted regarding the magnitude and importance of any cost shifting attributable to NEM.
- In a prior PUCN order, the Commission had decided to phase out NEM after weighing the program’s positive and negative impacts using 11 identified “known and measurable” factors (including interconnection and administrative costs).
- In that earlier valuation, the PUCN declined to include broader externalities—such as environmental or social costs or benefits borne by third parties—because they were not sufficiently quantifiable.
- Sierra Pacific’s new application effectively asked the PUCN to revisit how NEM should be treated in light of the requested additional 6 MW and arguments that rooftop solar yields benefits not captured by the Commission’s measurable-factor approach.

## Issues

1. Whether, when deciding whether to authorize an additional 6 MW of rooftop-solar generation under NEM, the PUCN was required to include unquantified externalities in its valuation of NEM.
2. Whether the PUCN should change course from its prior decision to phase out NEM and approve Sierra Pacific’s request to add 6 MW of rooftop solar under the NEM program.

## Decision

- The PUCN held it was not required to account for unquantified externalities when valuing NEM in this ratemaking context.
- The PUCN determined its prior methodology—relying on identified, known, and measurable factors—was reasonable.
- The PUCN declined to alter its earlier decision phasing out NEM and denied Sierra Pacific’s request to add 6 MW of rooftop-solar capacity under the NEM program.

## Legal Principles

- A public utility commission evaluating NEM may base its valuation on identified, known, and measurable costs and benefits, including items such as interconnection and administrative costs.
- A commission is not obligated to incorporate speculative or unquantified externalities into ratemaking determinations concerning NEM compensation.
- Where the commission has adopted a measurable-factor framework for NEM valuation and has made a prior policy choice (such as phasing out NEM) based on that framework, it may continue to apply that approach in later proceedings absent a showing that a different valuation method is required.

## Conclusion

The PUCN refused Sierra Pacific’s request to add 6 MW of rooftop solar to Nevada’s NEM program, concluding that its existing valuation approach—limited to known and measurable costs and benefits—was reasonable and that it did not have to include non-quantified externalities when deciding whether to revisit its earlier decision to phase out NEM.


Application of Sierra Pacific Power Co. v. Public Utilities Commission of Nevada, 2016 WL 7635932 (Nev. Pub. Utils. Comm’n 2016)