LAS VEGAS (AP) -- NV Energy Inc. has abandoned its plan to charge customers for part of the price of its acquisition by a subsidiary of Warren Buffett's Berkshire Hathaway.
The company announced Friday that it had proposed a settlement with the state Public Utilities Commission, which objected to the plan.
In May, Berkshire Hathaway's MidAmerican Energy said it would buy the Nevada electric and natural gas company for $5.6 billion. The deal is expected to close sometime in the first quarter of next year. It will be one of MidAmerican's biggest deals.
The plan was for MidAmerican shareholders to put in $3.6 billion, and utility customers to pick up the remaining $2 billion, called the acquisition premium.
"The $2 billion doesn't represent cost to provide service to the captive customers. It represents a premium paid by MidAmerican and Berkshire Hathaway to NV Energy shareholders," attorney general spokeswoman Jennifer Lopez said. "The premium paid is going to the shareholders and not benefiting the customers and should not be passed on to ratepayers to pay in its electric rates."
Tony Sanchez, senior vice president of government and community strategy at NV Energy, said both his company and MidAmerican Energy were eager to listen to customers and regulators.
"You don't know until you file the case," he said. "One of the concerns that we heard from everyone was over passing on the acquisition premium. We heard that loud and clear, and that's why that was taken off the table."
Sanchez added that state regulators had approved a similar plan once before and that charges would have been offset by savings the company will realize through the acquisition.
In addition to backing off from passing the cost to customers, NV Energy agreed in the settlement to refund customers $20 million. The Nevada attorney general's Bureau of Consumer Protection had demanded the refund, saying the utility, which has a monopoly, was earning excessive returns. NV Energy earned about $322 million on revenue of $3 billion in 2012.
The settlement also bars the company from passing on the cost of raises for senior managers in the form of rate hikes. The utility commission, which did not immediately return calls for comment, still has to approve the settlement. The panel is expected to decide in November.
On Thursday, NV Energy announced that it was moving forward with a plan to join an energy network that would allow it to pool and distribute power from Nevada and California energy markets.
The utility said initial results from a study it conducted with the California Independent System Operator Corporation indicated that a partnership could save ratepayers money. The company said it plans to ask state regulators to approve the partnership once the study is completed.
Hannah Dreier can be reached at http://twitter.com/hannahdreier
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