Newspaper column: NVision has hidden costs

In testimony to a state Senate committee, NV Energy spokesman Pete Ernaut estimated the company plan to scrap coal-fired generators early and replace them with natural gas and renewables, cutely labeled NVision, would add no more than 4 percent to power bills over the next 20 years. Instead of rising by 32 percent under current plans, rates would climb 36 percent, plus inflation.

But there are hidden costs and a myriad of assumptions that may not pan out, as reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.

As part of its plan, NV Energy submitted Senate Bill 123 to the Legislature. The bill would cut the company’s risks and assure ratepayers and taxpayers cover the costs.

To replace the coal generation, the company plans to build 2,000 megawatts of natural gas-fired power plants as well as 150 megawatts of renewable energy and contract out for another 450 megawatts of “green” energy.

Reid Gardner plant would close early. (Sun photo)

While the impact on ratepayers appears relatively minor, left unsaid was what the impact of adding 600 megawatts of “green” power might have on federal, state and local taxes. SB123 takes nearly $300 million of ratepayer money and gives it to those who build solar and wind generation at homes, businesses and government agencies, covering as much as 50 percent of the cost of construction.

Additionally, smaller solar panel projects are exempt from both sales and property taxes. Larger facilities are eligible for various tax abatements, too, as well as millions in federal Energy Department grants and production tax credits and nearly free public land.

Such hidden costs are not easily quantified and affect even those who are not served by NV Energy.

Once these renewable energy projects are built the price per kilowatt-hour of electricity will be locked in with 20-year contracts with annual price increases, no matter what happens to the price of natural gas or technological breakthroughs.

Dan Jacobsen of the attorney general’s Bureau of Consumer Protection, which represents ratepayer interests at the Public Utilities Commission, said, “In addition to replacing about 1,000 megawatts of coal capacity, the bill also would be replacing a very large amount of power purchase agreements right now that ratepayers don’t have to provide a return on.”

NV Energy’s profits come from a rate of return on equity, which is currently about 10 percent, but the more equity in power plants and power lines the greater the return.

Jacobsen also said SB123 could deter the PUC’s ability to control costs. One part dictates the “Commission shall approve” costs, and another says emissions reduction “shall be deemed to be a prudent investment. The electric utility may recover all just and reasonable costs …”

Read the full column at the Ely or Elko websites.