Editorial: Voters should dump a tax, add a tax and end a monopoly

Early voting in Nevada (R-J photo)

Early voting in Nevada (R-J photo)

Correction: Nevada no longer has some of the highest electricity rates in the West. According to the U.S. Energy Information Administration, as of August, only Idaho had lower residential rates than Nevada in the Mountain West states.

Nevada and many other states were well on the way to breaking up the electricity monopolies 15 years ago until the Enron market manipulation debacle that led to blackouts and price spikes scared lawmakers off. A free market was not the problem, it was criminal collusion and fraud.

Now, Nevadans have another chance to let free markets set the price of electricity instead of monopoly power companies and public utility regulators.

Question 3 on the statewide November ballot, if passed, would start the process of amending the state Constitution to prohibit granting electricity monopolies or exclusive franchises.

The argument for passage of Question 3 — the Energy Choice Initiative — points out that Nevada has some of the highest electricity rates in the West, this is partly due to the fact  electricity rates are dictated by the Public Utilities Commission, which by law must guarantee a profit for the monopoly utility companies. This is determined by setting a rate of return on equity, which incentivizes the power companies in the state to build expensive power plants when cheaper power might be available on the grid in an open and free market. There is no competitive pressure. There is little incentive to innovate.

Though the backers of Question 3 tout the potential of renewable energy development, the real benefit of passage is competition and innovation to achieve the most efficient and cost-effective power supply, whatever drives the generators.

Yes, Question 3 is supported by the large corporations and casinos who would benefit from buying cheaper electricity on the open market instead of from the monopoly NV Energy owned by billionaire Warrant Buffet, but residential customers also should benefit in the long run. Data from states that have adopted energy choice reveal a nearly 20 percent cost savings for consumers.

This newspaper endorses passage of Question 3.

Question 4 on the November ballot would also amend the state Constitution. Approval would require the Legislature to exempt durable medical equipment, oxygen delivery equipment, and mobility enhancing equipment from any sales or property taxes.

This would not only reduce the cost for those who require the equipment but also for all of us in the insurance pool who bear the cost.

We recommend a vote in favor of Question 4.

In each county in November the voters will be asked whether to index the tax on vehicle fuel to inflation with all resulting additional revenue going to build and repair roads specifically in those counties.

The 2015 Legislature allowed all counties to put a fuel tax indexing question on the ballot. This would allow the existing tax per gallon to increase at the same rate as the Producer Price Index, but with a cap of 7.8 percent per gallon. Some counties may choose a lower cap.

In this case the taxpayer-road user has a clear benefit in return for the outlay and thus a rare real return on investment. We think the voters would be wise to approve this tax.

(2016-ballot-questions-public-booklet)

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

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Newspaper column: Ballot measures may let voters determine battle of titans

It can be rather entertaining to watch titans grapple for power — unless they are doing it in your backyard and you can be trampled.

The titans in this case are billionaires Warren Buffett, whose companies own Nevada’s largest electricity provider NV Energy, and Elon Musk, chairman of SolarCity, which installs rooftop solar panels that allow customers to purchase less electricity from Buffett.

NV Energy managed to get the state Legislature to change the law regarding rooftop solar panels and then convinced the state Public Utilities Commission (PUC) to drastically increase the connection fees charged solar panel owners and drastically reduce the reimbursement rate for power uploaded to the grid from those solar panels, which is called net metering. The ruling applies not only to new solar panel installations, but also to the 17,000 who previously installed solar panels with an implicit state promise of being able to earn a return on investment, which now is no longer possible for many. The new rates are being phased in over 12 years.

Though the rule changes are specific to NV Energy they have the potential to affect power prices and policies for other power providers in the state.

As an outgrowth of this struggle two measures have qualified to be on the statewide November ballot after garnering qualified signatures of more than 55,000 voters.

Question 3 on the ballot would amend the state Constitution to prohibit power company monopolies by 2023. The approved description of the amendment as circulated for signatures reads, “This petition prohibits a legalized monopoly for electric utility generation and gives Nevada electric utility customers the right to choose their service provider from an open retail market based upon price, reliability, and other important factors. This includes the right for these persons, businesses, associations, and other entities, whether on their own or in conjunction with others, to produce their own electricity from renewable energy sources or other sources, and to sell that electricity on the open market.”

Elon Musk and Sen. Harry Reid are listed by Ballotpedia as supporters of the amendment.

Question 5 would essentially repeal the PUC’s tripling of connection fees for solar panel owners and cutting reimbursement for uploaded power to one quarter of the previous rate. SolarCity and Reid are listed as backers.

Whether Question 5 will remain on the ballot will be determined by the Supreme Court, which has a scheduled a hearing on the matter for this week. A lower court judge has held that the matter, which substantially changes state law, should first go before the 2017 Legislature and then before the voters in 2018.

Both measures have the potential to alter the power market in Nevada. The voters may decide which titan wins.

In a case of the right hand not knowing what the left hand is doing, the Governor’s Office of Economic Development enticed Musk’s SolarCity to open operations in Nevada by offering $1.2 million in taxpayer money to create new jobs — $800,000 of which was already paid out when the PUC altered the playing field for solar panel firms and SolarCity responded by laying off most workers and shutting down most operations. Other companies have done likewise and rooftop solar panel installations have practically disappeared.

The PUC bought into the argument that solar panel owners used less power and therefore weren’t paying a fair share of the basic infrastructure costs, even though the only difference between solar panel owners and those who are just frugal is that solar panel output can be measured. They also agreed solar panel owners should not be paid the current retail rate for uploaded power, while ignoring the fact solar power is uploaded at peak power usage times when wholesale rates are far higher than the 24-hour average and often higher than retail.

This killed the rooftop solar business. According to media accounts, applications for solar installation dropped from 1,368 in December to 69 in January and only 18 in June.

As for Question 3, a number of major casinos are currently in the process of opting out of the monopoly power system, saying they can purchase power more cheaply on the open market. Why not others?

According to the U.S. Energy Information Administration, in the Mountain West region as of May Nevada had the highest residential cost per kilowatt-hour.

Disclosure: The writer is a solar panel owner.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

Update: See Thursday posting here.

NV Energy calls on PUC to grandfather rates for existing solar panel owners

Backyard solar panels

NV Energy filed an advice letter with the Public Utilities Commission Wednesday asking that the agency grandfather the rates charged to those who had installed rooftop solar panels prior to Jan. 1.

The PUC had ordered that over the next 12 years all rooftop solar owners, new and existing, would be charged higher connection fees and receive less credit for power uploaded to the grid.

The letter states:

NV to PUC

The PUC could act within a matter of weeks or months, while the legislative change sought by the task force could not come until after the 2017 legislative session.

The higher rates were at first supposed to be implemented in four years, but the PUC later stretched it out over 12 years.

“After a number of recent failed attempts to negotiate a resolution of this grandfathering issue with out-of-state private solar suppliers, it became clear that NV Energy needed to step up and act alone,” Paul Caudill, president and CEO of NV Energy, is quoted as saying in a company press release. “I have spoken with many of these net metering customers personally, and understand and empathize with their concern. We simply did not want to wait any longer to offer a solution on their behalf and believe our filing today represents the most efficient and timely way to do that.”

Of course, this does nothing to bring back the many hundreds of rooftop solar installation jobs that disappeared with the new PUC rates and will make any future residential installations fiscally impractical, because new installations might not achieve a return on investment over the life expectancy of the panels.

The new rates only cost me, a backyard solar panel owner, about $9 on my June bill but the future rates would push the added cost to nearly $45 for a typical June, assuming minimal decline in panel output.

In that same press release, Kevin Geraghty, senior vice president of energy supply, blamed solar panel installers for misleading customers into thinking their rates would be locked in.

Yes, the contract does say: “Utility’s distribution tariffs may be amended by the PUCN (Public Utilities Commission of Nevada) at any time.”

Amended, not abrogated. Who could have anticipated this kind of bait and switch when the powers that be were all preaching green energy all the time to save the planet?

In addition to the NV Energy request to the PUC, a ballot initiative has been approved for this November’s ballot that would roll back the PUC’s new net metering rates. The state Supreme Court is scheduled to hear arguments Friday and whether it meets legal requirements to go forward.

To be fair, NV Energy did not seek to have the new higher rates apply to existing customers. That was the work of the PUC staff. But approximately 32,000 contracted angry customers is not good public relations.

Then there also is an initiative that qualified for the ballot that would end monopoly status for electric utilities in the state and allow customers to purchase from an open market. That would not be good for the bottom line of NV Energy and the other power companies in the state.

Check back Friday for this week’s newspaper column and a discussion of the power struggle.

 

 

 

 

Solar panel owners are subsidizing other power customers, not the other way around

Solar panels being installed on a Nevada home in 2015. (R-J photo by Jeff Scheid)

I never could figure out why, when NV Energy jacked up the rates charged to residential solar panel owners because they were somehow being subsidized by non-panel owners, the rates for non-panel owners were not concomitantly reduced and yet the move was somehow going to be revenue neutral.

Two reports out this week say NV Energy’s subsidy contention is bogus, and, in fact, solar panel owners are providing a net benefit to power customers in general.

A report from The Brookings Institution notes that Nevada’s net metering rates — that change solar panels from being an asset to a liability — have caused the installation of new solar panels to plummet 92 per cent in the first quarter of this year.

The Brookings report, by Mark Muro and Devashree Saha, asks and answers what it calls the burning question:

Does net metering really represent a net cost shift from solar-owning households to others? Or does it in fact contribute net benefits to the grid, utilities, and other ratepayer groups when all costs and benefits are factored in? As to the answer, it’s getting clearer (even if it’s not unanimous). Net metering — contra the Nevada decision — frequently benefits all ratepayers when all costs and benefits are accounted for, which is a finding state public utility commissions, or PUCs, need to take seriously as the fight over net metering rages in states like Arizona, California, and Nevada.  Regulators everywhere need to put in place processes that fairly consider the full range of benefits (as well as costs) of net metering as well as other policies as they set and update the policies, regulations, and tariffs that will play a critical role in determining the extent to which the distributed solar industry continues to grow.

As I have said before the problem is that monopoly power companies have an infrastructure cost that remains no matter how much power it sells. The only difference between a solar panel owner and a customer who conserves and is efficient is that the solar panel output can be measured. NV Energy calculates that solar panel owners were avoiding paying their fair share of infrastructure costs — to the tune of about $52 a month.

But solar panel installer SolarCity and the Natural Resources Defense Council calculate that rooftop solar provides a net benefit to all Nevadans of 1.6 cents per kilowatt-hour in actual costs and as much as 3.4 cents per kWh if you include benefits to the environment, which is admittedly hard to calculate.

NEMrates

The report by Brookings also notes that a 2014 study prepared for the Nevada Public Utilities Commission found that net metering provided $36 million in benefits to all NV Energy customers and over the 25-year lifetime of the panels the net benefit amounted to $166 million — just for the ones installed so far.

A 2015 study from Maine said the value of rooftop solar was $0.33 per kWh compared to the average retail price of $0.13 per kWh. “The study concludes that solar power provides a substantial public benefit because it reduces electricity prices due to the displacement of more expensive power sources …” Brookings concluded.

The report goes on to list numerous other studies that found solar panels benefited power customers in general rather than being a drain.

Brookings addresses the infrastructure cost issues by recommending decoupling. The NRDC says this is done by regulators of private utilities using “modest, regular rate reconciliations every year to compensate for under- or over-collection of fixed costs during the previous year. More than half the states have adopted decoupling mechanisms for either electric or natural gas utilities as a necessary (but not sufficient) part of the policies that allow utilities to invest in the cheapest and cleanest energy resource: energy efficiency.”

Though 15 states have adopted decoupling, according to Brookings, states like Nevada, which has not, are fighting net metering the hardest. “Typically, decoupling has been used as a mechanism to encourage regulated utilities to promote energy efficiency for their customers,” the Brookings authors say. “However, it can also be used as a tool to incentivize net metering by breaking the link between utility profits and utility sales and encouraging maximum solar penetration. Advocates of decoupling note that it is even more effective when paired with time-of-use pricing and minimum monthly billing.”

 

Mt. Wheeler Power Co., which covers all of White Pine County as well as parts of Nye, Elko and Eureka counties and parts of three counties in Utah, still provides net metering rates for its customers with solar panels. The current rate is 3 cents per kWh but that is expected to increase when the company’s wholesale provider is expected to increase rates, a company executive said.

Valley Electric Association, which services Nevada power customers along the California border from Mineral County to Sandy Valley in Clark County, shows on its website that it also provides net metering rates.

You can’t get there from here — but you can go for free

Gov. Sandoval demonstrates how to recharge a car that was shuttled to Beatty for the dog and pony show. (R-J photo by a photog who probably drove to Beatty in a gasoline-powered car)

Think of it as an electric oasis — a place to fill up along your caravan journey across the desert to pay homage to the lords of government in Carson City.

Only, you can’t get there from here.

According to the morning newspaper, Gov. Brian Sandoval took time out of his busy schedule Tuesday to travel to Beatty to dedicate the state’s first electric car recharging station. Three more are planned along the 450 miles of Highway 95 between Las Vegas and Reno. It is dubbed the Electric Highway by the word crafters at the state.

Pay no attention to the fact most electric cars have a range of less than 100 miles before requiring a recharge and the distance from downtown Las Vegas to Beatty is nearly 120 miles.

To demonstrate for the assembled press, according to the paper, Sandoval recharged a Ford Focus from the state Department of Transportation. Since the car has a range of only 76 miles, it had to be shuttled to the ceremony from Las Vegas.

And even if the car could reach the recharging station at Eddie World, plan on spending a little time at Eddie World, because most of the outlets require four hours to recharge, though a couple can do an 80 percent recharge in half an hour. But I doubt there will be long lines for “speedy” outlets.

But a full charge would get you to Goldfield, where you can call for a tow truck to take you the 26 miles to the next recharging station when it is built in Tonopah, but you can charge up your electric toy for free courtesy of the state and the local electric utility for the next five years.

“This really is significant for us,” the governor was quoted as saying. “Just think about it. This is the first electric highway in the United States. And when I talk about the New Nevada, it’s significant steps like this that show the rest of the country that we are tech savvy, especially when it comes to electric cars and autonomous vehicles.”

NV Energy touts building Electric Highway with your tax money and rate money. Robbing from the poor to give to the rich.

Newspaper swallows power company’s bogus net-metering claims

When they are right, they are right. When they are wrong, they are wrong.

For the second time in a matter of weeks the Las Vegas newspaper used its editorial page to criticize the state for propping up the rooftop solar power industry with tax credits and subsidies and favorable rate structures.

They are right. The rooftop industry would never have gotten off the ground without generous subsidies and tax credits and even then the systems would not have penciled out for homeowners if they were not allowed to deduct from their monthly bills the number of kilowatt-hours uploaded to the grid — which is called net-metering.

It never should have happened but it did.

But they are wrong to swallow NV Energy’s bogus claim that somehow those who do not own rooftop solar are subsidizing those who do. It is also wrong to “take” the property value of those who were persuaded to install rooftop systems with their own money but are now told they can never recoup their investment because the state regulators changed their minds.

“Indeed, NV Energy was paying rooftop solar power generators 11.5 cents per kilowatt hour for excess energy, more than twice as much as the utility company paid for energy on the open market (4.4 cents per kWh),” the Review-Journal editorializes, failing to note that 4.4 cents is the 24-hour average but that solar panels generate extra power during the peak period when rates can easily exceed 30 cents per kWh. Nor do they note that NV Energy has contracts to pay more than 13 cents per kWh for industry scale solar power.

NV Energy has even set up Time of Use (TOU) rate schedules that its customers may choose to opt into. That’s what smart meters are for. Under one payment schedule a residential customer in the summer would pay 36 cents a kWh during peak hours but only 6 cents during off-peak hours. Another schedule with different parameters would charge 50 cents a kWh during summer peak.

Today’s editorial concludes without so much as a blush of self-awareness, “Nevada is well into the race to provide businesses with incentives, chasing and being chased by other states eager to do the same. But the state would better serve its citizens by getting out of economic development altogether and halting the subsidization of private enterprises that will compete against companies that aren’t subsidized.”

I don’t recall the R-J expressing indignation at the handouts for Tesla Motors and Faraday Futures, merely a couple of cautionary notes and calls for vigilance and transparency.

I do seem to recall a recent editorial praising the use of public money to build a stadium backed by the paper’s new owner Sheldon Adelson. There is a story in today’s edition stressing that the funding model isn’t final, though it still lists the public funding as covering 65 percent of cost.

There also is a story about the state doling out grants to build recharging stations for electric cars, for which the power would be free for five years. The state just can’t stop.

Today’s editorial is based on the NV Energy calculation that solar panel owners have been avoiding paying their fair share of infrastructure costs — to the tune of about $52 a month.

The Public Utilities Commission answer to this specious claim was to triple connection fees for those on net-metering and slash to less than 3 cents the compensation for uploading a kWh of electricity. They are now contemplating grandfathering existing net-metering customers for 20 years, as the R-J reports today. California recently grandfathered existing solar customers, as have other states. Of course, this will do nothing to renew the rooftop solar installation companies who have laid off workers and stopped doing business in Nevada.

But The Alliance for Solar Choice begs to differ. In a PUC filing, the group claims NV Energy failed to adequately take into account the value of exported energy during peak hours, which reduces the need for additional power generation and capital costs.

TASC calculates that each residential solar panel owner provides a net benefit of $12.08 per month to NV Energy and does not require a subsidy of $52 a month. (TASC subsidy filing)

File photo accompanying today’s R-J editorial online.

 

 

Solar panels: Who is really subsidizing whom?

When the Nevada Public Utilities Commission (PUC) adopted new net-metering rates for residential owners of solar panels, effective Jan. 1, it did so based on NV Energy calculations that solar panel owners were avoiding paying their fair share of infrastructure costs — to the tune of about $52 a month. Thus, the PUC raised the connection fee for net-metering customers and slashed the amount of credit given for power uploaded to the grid.

But The Alliance for Solar Choice begs to differ. In a recent filing with the PUC, the group claims NV Energy failed to adequately take into account the value of that exported energy during peak hours that reduce the need for additional power generation and capital costs.

TASC calculates that each residential solar panel owner provides a net benefit of $12.08 per month to NV Energy and does not require a subsidy of $52 a month. (TASC subsidy filing)

“Exported energy effectively reduces deliveries to neighbors, so should reduce increases in aggregate need to invest to meet capacity growth,” TASC argues in its filing. “These adjustments, which are based on evidence in the record of this proceeding, demonstrate that Vote Smart is correct in concluding that Net Metering does not result in an unreasonable cost shift.”

Vote Smart has also filed challenges to the net-metering decision.

TASC1

OK, I don't actually understand it either, but ...

OK, I don’t actually understand it either, but …

The PUC is considering a NV Energy filing calling for grandfathering rates for existing residential solar and transitioning rates over 20 years.

Meanwhile, the net-metering battle has moved to Washington, where Sen. Harry Reid, D-Nevada, and Sen. Angus King, I-Maine, are seeking an amendment they say would block states from jacking up rates on solar panel owners and save the future of the rooftop solar industry, according to the Review-Journal Washington bureau today and the R-J Carson City bureau yesterday. (Where this power is granted in the Constitution is certainly questionable, because interstate commerce is probably not involved.)

“We should not be pulling the plug on clean energy at a time when more and more Americans are making it work,” Reid said in comments on the Senate floor, according to the R-J.

Meanwhile, on the front page of Investor’s Business Daily, it is reported that subsidies will continue to make residential rooftop solar economical in 2017, but “Nevada won’t be among them.”

IBD says the Nevada PUC overhaul of net-metering rates and the rapid exit from the state of several solar panel installers show the “residential solar market still relies heavily on subsidies and favorable regulation.”

 

“Clearly, you’re not going to have the opportunity you’ve had in recent years in that market,” an analyst told IBD. “Given that, in our view, demand is going to hit the floor in Nevada.”

Amid all this, petitions are being contemplated to allow the voters to overturn the PUC net-metering decision and to break up the NV Energy monopoly, the R-J reports.

Nevadans for Affordable, Clean Energy Choices’ petition would allow NV Energy customers to choose another source of power by 2023. Several casino companies are already trying to get the PUC to allow them to buy cheaper power elsewhere.