Regulatory lag is reduced because Nevada Power Co. (NPC) is permitted to use a hybrid test period, reflecting known and measurable adjustments for construction work in progress for certain resources for a seven-month period after the initial test period. The regulatory commission also allows for credit-supportive cost recovery mechanisms, such as revenue decoupling, fuel cost recovery riders, infrastructure replacement mechanisms, and energy efficiency-related recoveries. The company uses purchased power to supply generation needs. Roughly 30% of generation is from power purchase agreements, including renewable and non-renewable energy. The high degree of purchased power creates the potential for operational risk, which is partly offset by recovery mechanisms like the fuel cost recovery rider. Regulatory independence and insulation have weakened because Nevada's
