- Who does the PUCN regulate?
- What is an investor-owned utility?
- What is a monopoly?
- Why monopolies?
- Which utilities are not regulated by the PUCN?
- Why doesn’t the PUCN regulate cooperatives, non-profit utilities or utilities owned by municipalities?
- How can I tell the difference between a for-profit, investor-owned utility and a cooperative, non-profit or quasi-governmental utility?
- What is a quasi-governmental utility?
1. Who does the PUCN regulate?
This is determined by state law (NRS 704.020). As a general rule, the PUCN regulates investor-owned public utilities that provide a monopoly utility service to customers.
2. What is an investor-owned utility?
It is a utility owned by an individual or group of people who invest their money in the utility for the purpose of making a reasonable profit. That is, they want to sell service at a price higher than their costs. Any money left over can then be reinvested in the utility or returned to the owners as a cash dividend.
3. What is a monopoly?
The Nevada Legislature has passed laws which allow investor-owned utilities in Nevada to be monopolies. A monopoly exists when there is no competition for a product or service. In the case of utility companies, this means that there is only one provider of a utility service in a given area, or service territory. In return for being granted the right to be sole provider in a service territory, the investor-owned utility submits to price and service quality regulation by the PUCN. Regulation of investor-owned utilities exists because the investor-owned utility is motivated by the pursuit of a reasonable profit. Regulation ensures that the utility provides reliable service at just and reasonable rates. In other words, the PUCN’s role is to prevent utilities from price gouging and/or providing substandard service because their customers have no available alternative provider of service.
4. Why monopolies?
Utility services such as water, gas and electric service, etc., are considered essential public services and require expensive infrastructure, such as transmission and distribution lines and pipes. It is often impractical for more than one provider in an area to provide utility services due to the cost of producing and constructing competing infrastructure. In other words, the barriers to entry for a competitor are high.
Deregulation of utility services is a possible alternative to a monopoly system. For example, the telecommunications industry was largely deregulated by the federal government through the Telecommunications Act of 1996. Advances in technology, such as fiber optics and cell phones, allowed competitors to function in this industry and a competitive market to be created. As a result, the PUCN’s regulation of telecommunication companies in Nevada is minimal. As of May 2013, the PUCN exercises traditional regulatory authority over rate and service quality for only 10 telecommunications companies called Small Scale Providers of Last Resort, which operate largely in the rural areas of Nevada. The PUCN has no traditional rate regulation authority over telephone providers in Clark and Washoe Counties.
5. Which utilities are not regulated by PUCN?
As a general rule, the PUCN does not regulate the service quality or rates of cooperatives or other non-profit utilities. The PUCN also does not regulate utilities operated by a city, county or state government, or quasi-governmental entity. However, the PUCN may have some limited oversight concerning these types of utilities’ service territory, construction permits for new plant, and excavation practices that may impact underground facilities (pipeline, electrical wire, etc.). Additionally, the PUCN has no regulatory authority over cable companies, Internet, satellite service, or trash collection services.
For comprehensive lists of PUCN-regulated companies, visit http://puc.nv.gov/Consumers/Be_Informed/PUCN_Regulated_Utilities/.
6. Why doesn’t the PUCN regulate cooperatives, non-profit utilities or utilities owned by municipalities?
The primary reason is that these utilities have their own governing bodies, generally elected by customers, which set prices and determine service quality. Thus, these utilities are considered by lawmakers to be self-regulated because they are run by and/or take direction from their customers. They set prices as high or as low as they deem appropriate and customers weigh in on these matters through the voting process. Regulation by the PUCN would be duplicative of the customer protections these utilities already have in place.
For more information about non-PUCN regulated companies and service provides, visit
http://puc.nv.gov/Consumers/Be_Informed/PUCN_Regulated_Utilities/ and scroll to the bottom of the page.
7. How can I tell the difference between a for-profit, investor-owned utility and a cooperative, non-profit or quasi-governmental utility?
The best way to determine this is to contact the utility or look for this information on its website. Short of that, many times the name of the utility provides a clue. Look for the words “cooperative” or “association” in the name (e.g., Harney Electric Cooperative., Inc., and Valley Electric Association, Inc.). Cooperatives and associations generally have their own governing bodies. Other words in a name that indicate an entity is not regulated by the PUCN include “authority,” “district” and “mutual.” These words indicate that a utility was created and is run by a government or quasi-governmental entity (e.g., Las Vegas Valley Water District or Truckee Meadows Water Authority).
8. What is a quasi-governmental utility?
A quasi-governmental utility is formed by an act of legislation and is generally run similarly to a government agency. The Truckee Meadows Water Authority (“TMWA”) is an example. Its website, http://tmwa.com, states that it “is a not-for-profit, community-owned water utility, overseen by elected officials and citizen appointees from Reno, Sparks and Washoe County.” The website also states that TMWA was “formed under the Joint Powers Legislation of the state of Nevada and is subject to the Open Meeting Law.”
The Southern Nevada Water Authority is another example. Its website, http://snwa.com/, states that it “is a cooperative agency . . . governed by a seven-member agency comprised of representatives from each of its member organizations.” The member organizations include the city of North Las Vegas, the city of Henderson, and the city of Las Vegas, among others.