NV Energy has secured nearly $250 mn in additional wildfire liability coverage after asking regulators to let customers help fund a $500 mn self-insurance policy. The utility still plans to move forward with that request as Nevada heads into wildfire season.
The company previously carried $500 mn in wildfire coverage. Early last year, it told state energy regulators it wanted to increase that amount as wildfires across the West became larger and more expensive.
NV Energy said it struggled to obtain more commercial insurance and asked to collect $500 mn from ratepayers over 10 years, accorrding to The Nevada Independent. The money would support a self-funded policy the utility could use if its infrastructure caused a catastrophic wildfire.
State regulators agreed that NV Energy should carry $1 bn to $1.5 bn in coverage. That level would bring the utility closer to Western peers such as PG&E and Southern California Edison.
Regulators were less convinced that customers should pay for the added coverage. Over the past 18 months, NV Energy, Public Utilities Commission of Nevada staff, and other parties have debated how a self-funded insurance plan would work.
The issue changed earlier this year when NV Energy acquired nearly $250 mn in additional commercial coverage. The utility now has about $772.5 mn in wildfire liability coverage.
NV Energy executive and lobbyist Tony Sanchez told lawmakers in April that the amount still would not be enough for a catastrophic wildfire. Company spokesperson Katie Jo Collier said commercial wildfire insurance markets remain volatile.
Collier said a self-insured structure would give NV Energy long-term stability, cost control, and flexibility. Major ratepayers have pushed back.
Energy and utilities consultant Bradley Mullins, representing businesses including casinos and Nevada Gold Mines, said the added commercial coverage weakens the utility’s case.
He said NV Energy had argued more commercial insurance was unavailable, and that is no longer true.
Opponents also warn that NV Energy could seek legislation in 2027 to limit its liability for utility-caused wildfires. Berkshire Hathaway, NV Energy’s parent company, has backed similar laws in other states where its subsidiaries operate.
Mullins said ratepayers should not become the insurer of last resort for catastrophic wildfire risks they do not control. He said forcing customers to absorb those costs would turn them into a backstop insurer.
Some economists see possible cost advantages in self-insurance. Michael Taylor, an assistant economics professor at the University of Nevada, Reno, said the approach could be cost-effective for both NV Energy and ratepayers.
Collier said keeping premium dollars in Nevada could provide value to customers if claims are not made against the policy. The argument is that less money would go each year to third-party insurers.
Taylor said the utility would likely avoid drawing from the fund when possible. That could push more focus onto wildfire mitigation.
NV Energy spent $265.6 mn on wildfire mitigation between 2020 and 2024. Since 2018, it has paid about $5.3 mn in wildfire liability claims.
PUCN staff have recommended a two-tier billing structure if regulators approve the proposal. All customers would pay a flat monthly charge.
NV Energy’s latest estimates put the monthly cost at $3.02 for Northern Nevada residential customers and $0.21 for Southern Nevada residential customers. That creates an 89% and 11% split.
Customers in the utility’s Natural Disaster Protection Plan Tier 3 fire risk zones would pay additional fees. Those zones include Lake Tahoe, Virginia City Highlands, Genoa, Mount Charleston, and parts of Clear Creek south of Carson City.
The legal setting around wildfire liability is also changing. In states served by Berkshire Hathaway utilities, lawmakers have moved to reduce utility exposure from wildfire claims.
Utah passed a 2020 law shielding utilities from litigation if they file and follow wildfire protection plans every three years. In 2024, Utah also created a ratepayer-financed fund for wildfire insurance claims.
Wyoming and Idaho have adopted laws shielding utilities from litigation when they comply with state-approved wildfire mitigation plans. Longtime Reno attorney Matt Sharp called Utah’s structure a giveaway for power companies.
Asked whether it would pursue similar legislation in Nevada next year, NV Energy did not answer directly. The company said it continues to review policy options tied to wildfire liability and insurance.
Sharp said liability limits would give NV Energy control over both the insurance money and potential customer reimbursement after a fire.
Mullins said regulators should wait until after the 2027 legislative session before approving more self-insurance.
Nevada’s wildfire outlook adds pressure to the debate. Since 1980, wildfires have burned nearly 16 mn acres in the state.
Last year, more than 452,000 acres burned, roughly average for Nevada after two wetter winters and lighter fire activity. State Forester and Fire Warden Ryan Shane said current conditions are serious.
A dry winter across much of the West, new grass growth, flammable fuels, and carryover fuels from last year have set Nevada up for a challenging season. So far this year, 60 fires have burned 265 acres, with most of wildfire season still ahead.
