NV Energy Inc. has asked Nevada regulators to slash annual revenues for its Nevada Power Co. subsidiary by $120 million in keeping with its previously announced four-part plan to help customers weather the COVID-19 pandemic.

The company on June 15 announced that it filed a general rate case review application with the Public Utilities Commission of Nevada on June 1. In that filing, the company requested a 6.17% annual revenue decrease, noting that this is one of the largest rate reductions it has ever sought.

If the PUCN grants the rate reduction as filed, the company's average residential customer in southern Nevada would see a decrease of $4.05 per month beginning Jan. 1, 2021.

The rates charged each customer class will vary based on a rate design founded on a marginal-cost-of-service study, according to the application. For example, single-family residential rates would be cut by 3.16% while large general service net-metered customer rates would be slashed by 20%.

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Meanwhile, NV Energy said it continues to waive electric service disconnections for nonpayment as well as late penalties while extending payment options to allow customers time to recover from financial distress resulting from the coronavirus pandemic.

As required by law, Nevada Power calculated its revenue needs based on its operations over the previous year. According to its application, the calculations show Nevada Power's current annual revenue requirement should decrease by $95.5 million.

In addition, Nevada Power prepared a cost-of-capital analysis that shows a decrease is warranted in its authorized overall rate of return from the current rate of 7.95% to a proposed rate of 7.40%, based on cost of debt, cost of equity and capital structure, the application said.

In direct testimony submitted with the application, NV Energy CFO Michael Cole said Nevada Power is able to request the revenue decrease due to its focus on managing costs, process improvements and efficiency gains, including a 6.7% reduction in staff compared to 2013 levels.

The company also is incorporating more renewable energy into its generation portfolio, which lowers the overall cost of energy, Cole continued.

At the same time, Nevada Power is facing pressure to keep rates down because the pandemic has impacted businesses, including hotel and gaming resorts, as a result of a decline in tourism. "Given the contagious nature of the virus, many customer-facing businesses have entirely shut down," National Economic Research Associates Director Kurt Strunk said in supporting testimony.

NV Energy in May announced that it would file the rate cut application. At the time, the company noted that providing lower rates was part of its effort to retain customers that had considered alternative energy suppliers. Those customers chose to remain with the utility with the understanding that it would acquire renewable energy and keep rates down.