Utilities rate negotiations save Air Force millions

  • Published
  • By Kevin Elliott
  • AFCEC Public Affairs
TYNDALL AIR FORCE BASE, Florida --  With a $9 billion annual power bill, the Air Force is always striving to reduce energy costs.  Recently, the Air Force Utility Law Field Support Center, located at the Air Force Civil Engineer Center, did just that.

When Nellis and Creech Air Force Bases in Nevada and Hill Air Force Base, Utah, received notice earlier this year that their energy rates would increase, the ULFSC stepped in. The ULFSC, a support center at the Air Force Legal Operations Agency comprising attorneys and paralegals specializing in utility rate litigation, entered into talks with the bases' utilities providers and other parties to challenge the proposed rate increases.

The result was settlements at Nellis, Creech and Hill that, together, will garner millions of dollars in energy cost avoidance for the Air Force over the next three years - money that can now be allocated elsewhere to meet other Air Force priorities.

"Energy security, cost and environmental impact are at the forefront for the proper utilization of limited Air Force and (Department of Defense) resources," said Capt. Drew Jernigan, utility litigation attorney. "Every utility bill that is lowered and cost avoided means commanders and leaders have more money to accomplish the mission." 

Both Nellis and Creech are customers of Nevada Energy, the state utilities company. On May 2, 2014, Nevada Energy filed a general rate case with the Nevada Commission requesting a rate increase that would have caused the two bases to pay significantly more for 2014 through 2016.

The ULFSC entered into negotiations with Nevada Energy and other parties to the rate increase in early August 2014 and, by the end of September, a settlement was reached.  The majority of interested parties agreed that the previous electric rates would be retained - essentially a zero dollar rate increase for the Air Force. The agreement was accepted by the Nevada Commission in October.

In the Utah case, Rocky Mountain Power filed a rate case with the Utah Commission Jan. 3, 2014, requesting a rate increase that would have caused Hill to pay millions of dollars more for 2014 through 2016. The ULFSC entered into negotiations with RMP at the end of May 2014, which resulted in a settlement agreement. The settlement avoided more than $1 million of the proposed increase for Hill. It was accepted by the Utah Commission on Aug. 29, 2014.

"The successful litigation and settlement of these complex cases are a true team effort," said Lt. Col. John Degnan, chief of the ULFSC.  "By leveraging our ULFSC attorney and paralegal assets with the AFCEC Legal Office and the AFCEC Energy Directorate, and our collaboration with commission staffs and industry, the ULFSC team has built enduring relationships and fairly achieved utility rate reductions for our bases and Federal Executive Agency partners." 

The ULFSC represents all federal agencies in its jurisdiction before state public service commissions, and negotiates utilities rate cases, ensuring federal agencies don't pay more than is fair for utilities.

The utilities rates negotiated in these latest cases will remain in place until the next rate case, which is expected in 2017.

"Settlements like these are highly productive and beneficial to the litigation process," Degnan said. "They allow a 'win-win' for the parties involved by avoiding litigation expenses, engaging in fair compromise and building better community relationships."