Newspaper column: Can Nevada lawmakers correctly introduce energy choice?

Let’s get one thing straight, the Energy Choice Initiative — Question 3 — on the November ballot is not deregulation of the electricity market. It would replace Nevada’s regulated energy monopoly with a regulated competitive energy market.

It would amend the Constitution to require lawmakers by July 1, 2023, to “establish an open, competitive retail electric market, to ensure that protections are established that entitle customers to safe, reliable, and competitively priced electricity …” This would include provisions to reduce costs to customers, ensure reliable service and prevent unfair practices. It would not require competitive transmission and distribution systems.

The initiative passed in 2016 with 72 percent voting in favor, but, since it amends the Constitution, voters must again approve of it this fall.

The ballot measure is being pushed by several large power users — chiefly the Las Vegas Sands hotel-casino company and the data company Switch. NV Energy, the monopoly power company that serves 90 percent of Nevada was silent on the issue in 2016, but has now pledged to join with opponents in spending $30 million to defeat Question 3. This past week four organizations that favor renewable energy — the Sierra Club, Natural Resources Defense Council, Southwest Energy Efficiency Project and Western Resource Advocates — announced opposition to the measure, saying they feared it would hamper efforts to increase “clean power” generation.

Republican gubernatorial candidate Adam Laxalt supports Question 3, while Democratic opponent Steve Sisolak opposes it.

Recently the Guinn Center — named for former Gov. Kenny Guinn and self-described as a nonprofit, bipartisan research and policy analysis center — put out an analysis of the ramifications should Question 3 pass that squarely straddles the fence.

In a conference call with the press, Meredith Levine, Guinn Center’s director of economic policy, said the organization was not taking a position but was providing historic and analytical data for the voters.

As to whether the initiative would result in lower or higher power bills, Levine said, “We have no idea what will happen. We could only say this is what could happen, what may happen, what other states have experienced.”

The report indicates the success or failure of Question 3 depends on how lawmakers write the rules.

One of the principal concerns seems to be whether NV Energy would be required to divest, or sell off, its generating plants and its power purchase contracts — possibly at a loss that would have to be passed on to customers.

“Question 3 does not require divestiture explicitly,” the Guinn report states. “However, as one industry expert explained to the Guinn Center, it might be inferred: in order to afford meaningful choices among different providers and ‘to promote competition and choices,’ if the utilities were to retain control over generation assets, it would contravene the spirit of the initiative petition.”

NV Energy has estimated this so-called stranded cost to be as much as $7 billion that would have to be paid by existing customers. The Public Utilities Commission of Nevada estimates those stranded costs could cause electricity rates to rise $24.91 a month in Southern Nevada and $6.52 Northern Nevada for residential customers.

But a report by the Garrett Group presented to the Governor’s Committee on Energy Choice recently on behalf of the initiative backers said such a sell off should be profitable, and, when coupled with the recent tax law changes, should cause power bills to drop by $11.16 a month.

The Guinn Center reported that some states that have instituted competitive power markets have seen prices rise due to fluctuations in fuel costs and other factors.

But it also noted that a Pennsylvania PUC commissioner reported its introduction of competition resulted in residential and commercial customers in Philadelphia and Pittsburgh paying 40 percent to 56 percent less for power in inflation-adjusted dollars than they did in 1996 and residential customers saved $818 million in 2016.

A 2015 study found that overall competition has been beneficial. From 1997 to 2014 states that had adopted customer choice for power saw inflation-adjusted residential rates fell 5.2 percent, while monopoly states saw those rates rise 3.9 percent.

So, the question for voters this fall may not be whether Question 3 is good or bad but whether we trust our lawmakers to be able to learn from the experiences of other states and write regulations that will be beneficial. Of course, that may also depend on what lawmakers are elected on the same ballot.

Frankly, we are torn.

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.

Newspaper column: How will energy choice affect rural Nevadans?

One of the big questions lingering about a constitutional amendment on the November ballot that would end electric power monopolies and create an open and competitive market electricity is: Just how will it affect customers of rural Nevada’s power cooperatives?

Question 3 on the 2016 General Election ballot — the Energy Choice Initiative (ECI) — passed by an overwhelming 72.4 percent to 27.6 percent. Because the measure would amend the state Constitution, it is back on the ballot this fall for final voter approval, but now a coalition headed by NV Energy is campaigning to defeat it.

David Luttrell — general manager of the Lincoln County Power District No. 1, president of the Nevada Rural Electric Association and a member of the Governor’s Committee on Energy Choice — said his power district has not joined the coalition opposing the initiative, but he is concerned the initiative’s impact on rural Nevada, should it pass, is not being adequately addressed.

“As we’re moving toward energy choice we were hopeful that there would be some recognition that the rural organizations, by definition, offer choice, so there are choices,” Luttrell said in a recent interview. “They were created by the people they serve for the people they serve. So at a very fundamental level that is choice.”

None of the rules will be written until and unless it passes again in November and goes to lawmakers. Luttrell said what is really going on at this stage is a kind of record building and fact finding.

“If you look at some of the comments of proponents of energy choice, one of the things they very strongly believe is that existing utilities do not and are not allowed to be retail energy providers, and their argument, I understand, I get the basis of their argument, is that an existing utility, retail energy provider, they do have an advantage that others that want to come into the area will not be able to compete against,” he said.

The proponents say it would be unfair and hinder real competition intended to lower overall power bills if the existing utilities are allowed to continue to generate power at the facilities they own and maintain existing contracts with outside suppliers.

While that argument is being made, it is not necessarily mandatory. The initiative itself simply requires the Legislature to pass a law providing an open, competitive retail electric energy market by July 1, 2023. The law must include provisions to reduce customer costs, protect against service disconnections and unfair practices, and prohibit the granting of monopolies for power generation, but could leave in place regulation of transmission or distribution systems.

On their website the backers of the initiative say it would be up to lawmakers to decide if current utilities would have to divest their generation facilities.

“In some energy choice states, energy consumers do not have to choose a new supplier. They can choose to remain with the incumbent utility. Other states have chosen to prohibit the utility from generating and selling power to consumers,” the ECI website offers. “In both cases, the utility retains ownership of the transmission and distribution grid and responsibility for maintaining the system and billing customers. Energy choice states simply give consumers the right to choose a new supplier, aggregate a community to purchase electricity, or generate their own power.”

But Paul Caudill, CEO of NV Energy, has told the Governor’s Committee on Energy Choice that, if voters approve the amendment, his company is ready to divest all generation assets and all purchase power agreements. He said the company has no interest in being a provider of last resort and will most likely transform into a wires only company.

NV Energy has suggested divestiture could result in so-called stranded cost of as much as $7 billion that would have to be paid by existing customers.

The Public Utilities Commission of Nevada estimates those stranded costs could cause electricity rates to rise $24.91 a month in Southern Nevada and $6.52 Northern Nevada for residential customers.

But a report by the Garrett Group presented to the Governor’s Committee on Energy Choice recently on behalf of the initiative backers said such a sell off should be profitable, and, when coupled with the recent tax law changes, should cause power bills to drop by $11.16 a month.

If rural power cooperatives have to divest their contracts for cheap hydroelectric power, Luttell says bills will necessarily soar.

Next week: Part 2

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.

Newspaper column: PUC tilts at power choice initiative

The Nevada Public Utilities Commission, which is tasked with regulating the state’s monopoly utilities, has put out a 109-page report detailing a litany of things that could go wrong if voters again approve at the ballot box in November a constitutional amendment creating a free market for electricity.

In 2016 voters approved the Energy Choice Initiative by an overwhelming 72.4 percent to 27.6 percent. Because the measure would amend the state Constitution it is back on the ballot this fall for final voter approval, but this time around a coalition headed by the state’s largest power monopoly, NV Energy, has vowed to spend $30 million to defeat it.

The PUC report reads like an in-kind contribution to that effort.

A foreword signed by PUC Chairman Joe Reynolds declares that, while the concept of open markets is quintessentially American, “ensuring a non-stop supply of electricity to every home, business, and governmental entity in Nevada every second of every day of the year, regardless of the weather or economy, makes it unique from other goods and services. Electricity is a basic necessity of modern life. Like air. Like water. Like food.”

The Nevada Independent pix by Jeff Scheid

Thank goodness for those government regulated monopoly grocery stores.

While Reynolds says the report neither supports or opposes the initiative, the bulk of its findings appear to find fault with the proposal.

The initiative would require the Legislature to pass a law providing an open, competitive retail electric energy market by July 1, 2023. The law must include provisions to reduce customer costs, protect against service disconnections and unfair practices, and prohibit the granting of monopolies for power generation, but could leave in place regulation of transmission and distribution.

One of the chief arguments for the measure is that competition would drive down cost.

But the PUC report claims the proposal is likely to increase monthly electric bills in the first decade of implementation. The bulk of this cost is attributed to the supposition that NV Energy will be forced to divest its generation assets, though there is no language in the initiative even suggesting any such requirement.

The report argues that this presumed divestiture would cost Southern Nevada residential power customers $24.91 a month and Northern Nevada residential customers $6.52, because NV Energy might have to sell off its power plants at a loss. A presumption compounding a presumption.

At one point the report seemingly declares that the system isn’t broken, stating, “Our residential rates are on average, and our commercial and industrial rates are lower than average.”

In its conclusion the report feigns solicitude for the poor residential ratepayer and warns that residential customers might suffer the most if the initiative passes.

“If history and experience are any type of guide, commercial and industrial customers, will fare far better, at least initially, than the average Nevada residential family through this proposed change,” the report states. “Large commercial customers, who currently cannot depart bundled electricity service pursuant to NRS Chapter 704B may financially benefit the most, as they cannot currently access a competitive open marketplace that may offer benefits to high-volume users.”

This is the same PUC that currently sets those residential, commercial and industrial rates.

According to the U.S. Energy Information Administration, which is cited as the source for that earlier mention of low rates on average, the residential rate set by the PUC were the highest among the eight Mountain states in January 2018, while the commercial rate was the third lowest and the industrial rate was the second lowest in the region.

While residents paid 12.36 cents per kilowatt-hour, commercial customers paid 8.04 cents and industrial users paid only 5.28 cents. Thirty-one states have lower residential power rates than Nevada, according to the EIA. Only four states have lower industrial power rates. Only three states have lower commercial rates. (The EIA site now has February rates.)

Aren’t you glad your state regulators are looking out for you?

The report does point out a potential legal conundrum. While the initiative creates a “right to sell trade or otherwise dispose of electricity,” it also says lawmakers retain the power to establish “policies on renewable energy, energy efficiency and environmental protection.”

A right would appear to trump a policy. The report asks whether a mining company might have the right to buy power from a coal-fired plant, despite a state law closing all such plants.

In a section on the impact on jobs, the report snidely concludes, “Lots of Nevada attorneys may also gain new work from the Energy Choice Initiative.”

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.

Newspaper column: Opposition to wind farm project expressed

As part of its review process to determine whether to approve an application to allow construction of wind turbines on 32,000 acres of public land in Nevada adjacent to the California border just west of Searchlight, the Bureau of Land Management (BLM) conducted a series of scoping meetings to allow public input.

At a recent meeting in Las Vegas a half dozen speakers largely expressed support for renewable energy but not on the proposed site.

According to a 2012 filing with the Nevada Public Utilities Commission, Crescent Peak Renewables is proposing to erect 220 wind turbine towers standing more than 400 feet high and generating 500 megawatts of power. The proposed site is adjacent to the Mojave National Preserve and the Castle Mountain National Monument in California and the Wee Thump Joshua Tree Wilderness and the South McCullough Wilderness in Nevada. All of the land is in Nevada.

Wee Thump Joshua Tree Wilderness Area (Pix by Kurt Kuznicki)

Alan O’Neill, retired superintendent at Lake Mead National Recreation Area, testified there is a coalition of conservation organizations in California and Nevada that asked the BLM to hold off on issuing the notice of intent for the wind project until a supplemental resource management plan could be completed.

O’Neill also said the groups asked that the area be designated as an Area of Critical Environmental Concern (ACEC).

“What we’d like the BLM to do, and I’m speaking on behalf of a number of conservation organizations, is for BLM to develop an alternative as part of this EIS (Environmental Impact Statement) process that has a ‘no wind’ alternative,   combined with establishing the Castle Mountains ACEC. We think that’s a solid alternative,” O’Neill said, noting there are 19 environmental conservation organizations plus four retired superintendents backing the proposal.

“It seems disingenuous to me that in the overall presentation you’re talking about an impact of 750 acres,” actual area cleared for pads and roads, O’Neill remarked. “It is surrounded by wilderness characteristics with basically no roads, except backcountry roads. Those roads are 10 feet wide, and you’re talking about building 93 miles of new roads 36 feet wide, in addition to 15 miles of road that they’re expanding to 36. The impacts of that are astounding. And you’re talking about a hole in the doughnut. You’re talking about this area surrounded by a protected landscape that many of us in this room have spent literally decades trying to get protected. You’re talking about putting in an industrial-sized development.”

Laura Cunningham, a member of the environmental group Basin and Range Watch, stated, “I would recommend going to this area, like the Castle Mountains in Nevada, and hiking, because I think what’s not being said here is how absolutely beautiful this place is. It is really pristine. There are hardly any roads there.”

Cunningham added, “So, this is a really wild, remote area, really biologically diverse. My group, Basin and Range Watch, we’re going to have a ‘bioblitz’ April 28th and 29th.”

Her group’s website explains that the bioblitz, which is defined as a biological survey in an attempt to record all the living species within a designated area, is part of an effort to persuade the BLM to designate roughly 38,000 acres of Nevada desert — which includes the proposed wind farm — as an ACEC.

“I was just hiking there a couple of weeks ago and it’s got a unique, rare Sonoran Desert grassland with Joshua trees and yuccas,” she said. “You get up on some of those low ridges, they don’t look like much on a map, but when you’re there it looks like you’re in East Africa or Namibia. You just don’t see anything — no transmission lines, maybe there’s one road way off in the distance, a dirt road.”

Jose Witt, who said he belongs to the Friends of Nevada Wilderness, said that, while there is a need to replace fossil fuel power generation with renewable energy, there also is a need to protect view sheds and wildlife habitat.

“If we put this type of development in the middle of all these protected lands, it ruins the integrity and conservation values of all this area. We fragment the habitat and essentially lose islands of protection, or become islands, because there is no continuity,” Witt said.

Shannon Salter said the Joshua trees in the area need to be protected. “Some of them are over 30 feet tall and they are approximately 900 years old. We need them protected. The name of their forest is the Wee Thump Joshua forest. That word Wee Thump is a Paiute Indian word, which means ancient one,” Slater said.

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.

 

PUC feigns concern of residential power customers

It is passing strange that the Nevada Public Utilities Commission has put out an unsolicited speculation on what might happen if the voters were to again approve at the ballot box in November a constitutional amendment ending the electric power monopoly in the state. The so-called Energy Choice Initiative passed by more than 72 percent in 2016.

But it is downright laughable how the report expresses feigned solicitude for the poor residential ratepayer.

While the report suggests that power rates might go up rather than down, as initiative backers claim, it warns that residential customers might suffer the most.

“If history and experience are any type of guide, commercial and industrial customers, will fare far better, at least initially, than the average Nevada residential family through this proposed change,” the report states. “Large commercial customers, who currently cannot depart bundled electricity service pursuant to NRS Chapter 704B may financially benefit the most, as they cannot currently access a competitive open marketplace that my offer benefits to high-volume users.”

This is the same PUC that currently sets those residential, commercial and industrial rates.

According to the U.S. Energy Information Administration, the residential rates set by the PUC were the highest among the eight Mountain states in January 2018, while the commercial rates was the third lowest and the industrial rate was the second lowest in the region.

While residents paid 12.36 cents per kilowatt-hour, commercial customers paid 8.04 cents and industrial users paid only 5.28 cents. Thirty-one states have lower residential power rates than Nevada, according to the EIA. Only four states have lower industrial power rates. Only three states have lower commercial rates.

Aren’t you glad the PUC is looking out for you?

 

 

 

Despite grandfathering, PUC rooftop solar panel rates still dampen innovation

While it is good to read that the Nevada Public Utilities Commission has reversed course and decided to grandfather the rates for existing rooftop solar panel owners, what is the future for home-based power generation?

Anyone contemplating installing such panels in the future still will face the much higher connection fees and much lower reimbursement for electricity uploaded to the grid. Though there is still that 30 percent federal tax credit, the chances of new solar installation ever providing a return on investment is nil.

The utility power companies in Nevada don’t want you to cut the cord. The rate schedule is an anti-innovation stance.

It is like taxing the oil well drillers to protect the whale oil industry.

If the market is to work, there ought to be a foreseeable avenue by which a savvy homeowner could put up solar panels and windmills, invest in batteries and hydrogen-powered fuel cells or other generators, as well as efficient appliances, to become free of the grid. But the disincentives created by the PUC make that a pipe dream.

The higher connection fee is ludicrous. There is no difference between generating your own power and simply being frugal by turning up the thermostat in the summer. As for the lower reimbursement rate for uploaded power, the PUC fails to take into account the power is uploaded during peak demand time when the power company must pay three or four times more on the open market and there is no transmission line cost or ohms drop.

Maybe there should have been a fee charged to those buying new fangled refrigerators to protect the job of the ice delivery man.

Backyard solar panels

Backyard solar panels

 

 

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.