If Harry Reid had his way our electricity bills would necessarily skyrocket

Harry Reid, right, at groundbreaking for First Solar project on Moapa reservation. (Energy Department photo)

Predictably Harry Reid, D-Green Energy Cronies, launched into full pouting mode after the Nevada Public Utilities Commission killed a proposal by NV Energy to build a $438 million, 200-megawatt photovoltaic solar power plant on the Moapa River Paiute Indian Reservation.

“This solar project would have provided hundreds of good paying jobs for Nevadans as well as economic and health benefits for the Moapa Band of Paiutes, who have been subjected to nearly five decades of pollution from the Reid-Gardner plant,” Reid’s statement reads. “With Nevada’s economy on the upswing, more power from clean energy sources is needed to feed the grid and fuel job creation. What more fitting then a solar plant on the Moapa Band of Paiute’s reservation?”

Though the coal-fired Reid Gardner Generating Station had undergone extensive technology improvements and was among the cleanest coal facilities in the nation, Harry “Coal Makes Us Sick” Reid managed to twist enough arms in the 2013 Legislature to garner passage of Senate Bill 123, which mandates closing the plant — with ratepayers picking up every last dime of expense rather than the shareholders of NV Energy — and replacing its 557 megawatt capacity with brand new natural gas-fired and renewable energy plants.

Of course, Sen. Reid neglects to mention that the customers of NV Energy don’t need 200 megawatts of power, but only 54 megawatts, and even that can be delayed awhile. Nor does he mention that those 54 megawatts, when and if it is needed, could be provided by spending $85 million on standard combustion turbine technology, not $438 million.

The Moapa Project, as proposed, would have been added to the total equity of billionaire owner Warren Buffett’s NV Energy. The PUC currently allows a return on equity of a little more than 10 percent, though the power company has asked for 15 percent for some recent project. The more equity, the more profits. Do the math: 10 percent of $438 million.

PUC documents indicate that approval of the Moapa plant would have cost ratepayers $50 million in 2017 alone, which “may have a significant effect on the creation of jobs in Nevada.” Possibly permanently negating Reid’s “hundreds of good paying (temporary) jobs?”

Add to this the fact that solar power costs about three to four times as much per kilowatt-hour as power from coal- or natural gas-fired plants.

Nor does the power company need the Moapa plant to meet its legislatively and arbitrarily established renewable power requirement. Even without this project NV Energy has enough renewables to satisfy the law through 2027.

All of the added expense for NV Energy would be propagated across the grid and affect the rates of power uses throughout the region, whether customers of NV Energy or not.

Additionally, the utilities commissioners were concerned that the power company had not opened the proposal to competitive bidding, which might help assure the lowest possible price for ratepayers.

Power users across Nevada should be grateful someone is looking out for us when it comes to our power bills, because it sure isn’t Harry Reid or our state lawmakers. Paying higher power bills makes us sick, Harry.

 

 

 

 

 

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Newspaper column: A funny thing happened on the way to Utopia

While the Nevada Legislature was passing a bill that would require NV Energy to prematurely close perfectly good, reliable, acceptably clean and inexpensive coal-fired power plants, the rest of the country was flocking to coal, as reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.
In the first quarter of the year, electrical power generation with coal went up 13 percent, while power generated with natural gas dropped 8 percent. This was due to huge price price for natural gas, which went up 78 percent from March so12 to March of this year, according to The Wall Street Journal.

The iconic polar bear photo.

But in the wisdom of our lawmakers, no matter what the price, coal plants are being replaced with natural gas-fired and renewable energy plants.
Meanwhile, the price of coal dropped four cents per million Btus. 

According to the U.S. Energy Information Administration, this year the price of fuel for power generation is $2.36 per million Btus from coal and $4.65 for the same generating capacity from natural gas. The cost of renewables is several times higher due to capital costs, though the price of fuel is nil.

Fuel costs in Nevada are passed on directly to the consumer.

At one point NV Energy officials predicted their plan to switch from coal to 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. It is unclear whether that figure took into account the 78 percent spike in gas prices.

Ostensibly the shuttering of coal-fired plants is so that Nevada power customers can do their part to save the planet from global warming or climate change or extreme weather or whatever it is called this week, but realistically power company executives probably believe President Obama will make good on his 2008 campaign promise: “If somebody wants to build a coal-fired power plant, they can. It’s just that it will bankrupt them. … Under my plan … electricity rates would necessarily skyrocket.”

The administration is behind schedule in finishing EPA emissions rules that would effectively ban new coal-fired plants using current technology. In a speech on Tuesday, Obama said he is unilaterally pressing forward on those rules and existing coal plants would be affected, too.

A funny thing happened on the way to the Apocalypse.

According to a New York Times article recently, the rise in the temperature of the planet has been markedly slower during the past 15 years than the 20 years before that, even though greenhouse gases have poured into the air at a record pace.

“The slowdown is a bit of a mystery to climate scientists,” the Times conceded. Their models did not predict this and cannot explain it, but don’t dare question the models.

Can someone please explain why Nevadans must pay handsomely for decades to come to prevent something that isn’t happening?

Read the entire column at the Ely or Elko websites.

Be cautious with plan to scrap coal and generate electricity with natural gas and ‘green’ energy

Calculating that Obama administration bureaucrats and Washington elected officials will sooner or later ratchet up regulations and legislation that will make the operation of coal-fired power plants prohibitively expensive, executives at NV Energy have decided to bailout early on its remaining coal operations.

This would entail shutting down generating units years ahead of schedule at the Reid Gardner power plant near the Moapa Indian reservation in northern Clark County and the North Valmy power plant between Winnemucca and Battle Mountain. The company also would end some power purchase contracts.

To replace these, the company plans to build 2,000 megawatts of natural gas-fired power plants as well as 150 megawatts of renewable energy — which could include wind, solar, geothermal or biomass — and contract out for another 450 megawatts of “green” power.

Reid Gardner power plant. (Sun photo)

To cut its risks and cover its assets the company has submitted Senate Bill 123 to the state Legislature. The bill would saddle the ratepayers with every dime of the cost of the decision to mothball the coal plants early — including any undepreciated balance, decommissioning and remediation, contract termination costs and even the value of any unused coal left lying around.

In testimony to a state Senate committee, company spokesman Pete Ernaut estimated the plan, which carries the cute title of NVision, would add no more than 4 percent to power bills over the next 20 years. Instead of rising by 32 percent in that timeframe, as current cost projections indicate, rates would climb 36 percent, plus inflation. Such long-term projections are tenuous at best and rely on myriad assumptions.

All those new power plants would result in 4,800 construction jobs at one time or the other over the coming years and a couple of hundred permanent jobs, Ernaut said. That hardly puts a dent in Nevada’s 132,000 unemployed workers.

You could almost hear the patriotic Sousa music in the background as Ernaut evangelized, “The plan represents a significant environmental statement. It creates a robust industry of renewable energy. It makes available renewable energy built in Nevada for Nevadans and by Nevadans. And, again, it’s hopefully a very bold step in the total energy independence for our state.”

One small improvement to SB123 from the way it was originally introduced is that a section that would have made “green” energy contract pricing information a trade secret has been deleted.

While the impact on ratepayers appears relatively minor, left unsaid was what the impact of adding 600 megawatts of renewable power might have on federal, state and local taxes.

SB123 takes nearly $300 million of ratepayer money and gives it those who build solar and wind generating facilities at homes, businesses and government agencies, covering as much as 50 percent of the cost of construction. In some cases a federal grant would cover about 30 percent of cost of such solar panel installations. It is unclear whether one could qualify for both handouts.

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. Larger utility-scale wind and solar projects are slated to be built on federally controlled public land that will be provided to the builders at pennies on the dollar instead of being sold at market value, another cost to the taxpayers.

Such hidden costs are not so easily rounded up and quantified.

Additionally, some are already warning that California, which also relies heavily on renewable energy for its power supply, could face spiking electricity prices and rolling “green-outs” when the summer heat arrives this year.

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 coal or even whether someone actually builds John Galt’s engine that runs off static electricity, as envisioned (pun intended) in Ayn Rand’s novel “Atlas Shrugged.”

The “levelized” cost of power, which includes penalizing fossil-fuel sources for greenhouse gas output, of different sources of electricity in the year 2016, predicts the U.S. Energy Information Administration, should be: coal 10 cents a kilowatt-hour, gas 6.5 cents, nuclear 11 cents, wind 10 cents, solar photovoltaic 21 cents, solar thermal 32 cents, geothermal 10 cents and biomass 11 cents.

But no one predicted the price of natural gas sold to power plants would fall from $9.26 per thousand cubic feet in 2008 to $3.52 in 2012.

According to calculations provided to Public Utilities Commission commissioners at a recent meeting, various renewable energy and power efficiency programs dictated by law already account for nearly 12 percent of the cost of electricity in northern Nevada and about 8 percent in southern Nevada. The company also projects that it will sell 2.1 percent less power in 2013 than in 2012.

Another concern was expressed to the Senate committee by Dan Jacobsen of the attorney general’s Bureau of Consumer Protection, which represents ratepayer interests at the PUC, which regulates NV Energy’s rates and energy planning. He 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, power lines and gas pipelines the greater the return.

“There are power purchase agreements that are pretty helpful in covering peak load but not having to be purchased at times when there isn’t a peak load,” Jacobsen noted. “That’s a pretty good mix at times for Nevada with extreme heat in the summer that doesn’t last more than about three months.”

Then Jacobsen addressed the most glaring flaw in the bill: It’s decades-long, Soviet-style central planning. “I hope you have an appreciation for the difficult, long-range  decision you are being asked to make in this bill,” Jacobsen said. “Step back and think about it for a minute, you’re being asked right now, based on information you have right now, to make a decision that, for example, in the year 2025 the right thing to do is to build a 500-megawatt natural gas plant.

“That’s 12 years from now. Technology can change a lot in 12 years. The demand projection can change a lot. The wholesale market can change a lot. Efficiency options can change a lot. But this bill says to you: Please mandate the right thing to do 12 years from now is to build a 500-megawatt natural gas plant. That’s quite a challenge for you as a policy makers to make.”

The consumer advocate also noted that some of the language in the bill would tie the hands of the PUC commissioners. One part dictates the “Commission shall approve” costs and emissions reduction “shall be deemed to be a prudent investment. The electric utility may recover all just and reasonable costs …”

Jacobsen commented, “That phrase ‘deemed prudent’ carries a lot of legal weight with it.”

The bill also would allow NV Energy to immediately increase rates once a new power plant goes online, and the PUC could later review the rates and could roll them back if excessive.

The last time the power company was given carte blanche to build power plants and begin to recover costs immediately, even before any review by state regulators, was in the 1980s. That was because the company needed new power supplies — from coal-fired plants.

F.A. Hayek wrote in “Fatal Conceit”:

“At least before the obvious economic failure of Eastern European socialism, it was widely thought by such rationalists that a centrally planned economy would deliver not only `social justice,’ but also a more efficient use of economic resources. This notion appears eminently sensible at first glance. But it proves to overlook the facts …: that the totality of resources that one could employ in such a plan is simply not knowable to anybody, and therefore can hardly be centrally controlled.”