As the West enters a high-risk wildfire season, Nevada’s largest utility is asking state regulators to OK a $500 million insurance policy funded by its ratepayers.
The request reflects the tension utilities face in the drought-ridden West. As wildfires become more frequent and destructive, utilities are looking for more coverage to repay customers and protect themselves financially. Those policies in turn are getting more expensive and harder to procure.
But NV Energy’s alternative proposal — a self-insurance fund backed by a rate increase — is a tough pill to swallow in the era of rising bills and political outrage over the affordability of utility bills.
“NV Energy is saying we want to self insure for the liability risk that our conduct might create a fire. That’s not so unusual when you look across many businesses,” said Matt Sharp, a Nevada-based attorney who works with wildfire victims. But “one of the concerns is how it affects the rates that customers are going to pay, including the customers who are at risk.”
State regulators and NV Energy have agreed the company should carry between $1 billion and $1.5 billion of total coverage. The problem is where that would come from — and whether customers would be at risk from even higher costs if NV Energy went to the private market.
“Any additional capacity comes at a very high price,” said Marshall Nadel, a risk and insurance consultant to the power industry, said in a state regulatory hearing last week. “There’s only so much capacity in the market.”
According to NV Energy’s filing, the insurance policy would be used to cover wildfire claims associated with an event linked to utility infrastructure. It only would go to claims and liabilities, and would not fund utility equipment repairs or general company operations.
According to the company, the proposal would add approximately $3 per month for northern Nevada customers and 21 cents per month for southern Nevada customers. The company is allocating more responsibility to northern Nevada because of the higher fire risk there.
If the fund is utilized, there also could be shareholder participation.
“It is designed to help protect customers from larger long-term financial impacts including sudden rate increases or financial instability following a major uninsured wildfire event while ensuring adequate wildfire liability coverage remains in place,” said NV Energy spokesperson Katie Jo Collier.
Regulators on the Public Utilities Commission of Nevada last week held two days of hearings to weigh NV Energy’s request. There is no firm timeline for a decision, according to a commission spokesperson.
NV Energy first pitched the self-insurance idea in January 2025. At the time, the utility carried $500 million in coverage and said it wanted upward of $1 billion to insulate itself from the risk of more catastrophic fires. That would put the company’s coverage in line with large California utilities.
Since submitting the filing, the company has procured an additional $250 million in coverage on the private market. That, however, has not changed the company’s request. The self insurance route, company officials have testified, is a way to make insurance costs more predictable.
Consumers, though, have questioned whether ratepayers should be the ones to back their utility’s insurance needs. The request comes as NV Energy is getting set to roll out a controversial new billing structure for its southern Nevada customers that critics say could raise costs — though the company says most ratepayers should see a bill decrease — and amid a dip in tourism to Las Vegas that threatens the state’s economic growth.
Leslie Vega, climate equity policy fellow at the Progressive Leadership Alliance of Nevada, said the insurance plan “seems like a way that a major corporation can shift its financial burden onto customers.”
“It seems like NV Energy is always trying to find ways to squeeze working-class customers for more money,” Vega said. “The working class that we partner with has not received raises to pay for this utility’s wildfire costs.”
Fire risk grows
NV Energy’s pitch comes amid a dire backdrop, where climate change has fueled destructive megafires across the West.
When those fires can be pinned on utilities’ equipment — like a spark from a transmission line — the financial consequences are steep. Utilities such as Berkshire Hathaway Energy’s PacifiCorp, Hawaiian Electric, Xcel and Pacific Gas & Electric have faced multimillion-dollar lawsuits in the aftermath of wildfires.
“The insurance industry has responded by ratcheting up premiums and reducing coverage and deductibles,” said Andy Dressel, vice president of energy for the consulting firm Charles River Associates. And since those costs typically can be passed on to consumers through rate cases, Dressel said the result is “definite strain” on the affordability of electricity bills.
According to the National Interagency Fire Center, large parts of the country are at an elevated fire risk because of ongoing drought conditions and vast quantities of dry fuel. Already, the agency said, more than 2.4 million acres have burned across the country, nearly twice the previous 10-year average for this point in the year. Fire potential is “above normal” for much of the West this month, although that potential is expected to return to normal levels in July for parts of the region.
A 2025 report from the Lawrence Berkeley National Laboratory identified wildfire insurance and mediation as a key driver of higher electricity rates, especially in Western states. A separate February reportfrom the California Public Advocates Office pegged wildfire costs as one of the main drivers of utility rates that have increased more than 75 percent in a decade.
California offers a potential model for Nevada’s self-insurance experiment. In 2019, the state created a fund for utilities — backed by both ratepayers and shareholders — to support any legal claims linked to a wildfire. Lawmakers, however, have weighed whether to expand or reform that fund as costs continue to rise.
Other Western states have seen efforts to reform liability for wildfire claims, limiting insurance claims. Berkshire Hathaway has pushed those bills, but Nevada has not passed any legislation.
