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.

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.

There’s a deadline somewhere, sometime, eventually

I can’t recall the number of times over the years that I’ve shouted across a newsroom to reporters nearing deadline: “This is a daily newspaper, folks, not a weekly.”

With the advent of the Internet, the old AP slogan, “There’s a deadline someone every minute,” seemed quite prophetic.

But after the election this past Tuesday, the Las Vegas newspaper devoted a single paragraph of news coverage to the thunderous defeat of Question 3, The Education Initiative or margin tax that would have imposed a 2 percent tax on companies with revenues exceeding $1 million a year.

Today the paper got around to devoting a story to the topic, albeit without quoting a single opponent of the measure and using a year-old photo online to illustrate it.

Photo of three education officials and an R-J editorial writer from September 2013.

 

The banging collapse of Apocalypse 3 doesn’t garner a whimper in Las Vegas newspaper

On the front page the day of the election.

On the front page the day of the election.

You would be pardoned if you thought Question 3, the 2 percent margins tax on Tuesday’s Nevadawide ballot, was actually named Apocalypse 3, since it was covered in the Las Vegas newspaper like the dew covers Dixie.

But on the morning after the election, the Las Vegas Review-Journal, or RJ as the flag now reads, gave damned short shrift to the topic. On the day of the election it warranted that ubiquitous ad on the front page and still another editorial warning of job loss Armageddon if it passed. The day after the election, it garnered a tiny listing in a graphic on the left side of the front page and was mentioned in the subhed on the 5A jump — not on 1A as the front page said — and earned a single paragraph there.

There was no analysis of why the ballot question failed or who was responsible. There were no what-next comments. No quotes from opponents and proponents. No recounting of how much was spent on the campaign. No Wednesday morning quarterbacking.

The topic got a brief mention in the day-after thumb-sucking what-next editorial and was listed in the full-page graphic showing election results as of presstime. That was it.

The Reno paper carried a separate story.

The Nevada Appeal in Carson City had a separate story.

The Associated Press filed a separate story on Question 3. The Elko Daily Free Press carried that AP story on the front page.

But the largest circulation newspaper in the state, if that is still the case, did not bother.

Speaking of short shrift, the Las Vegas newspaper’s political columnist, who writes only three times a week and one of those being Wednesday, apparently was too busy playing the role of television pundit with his pal the defrocked newspaper political columnist to even bother phoning in a column on the election outcome, which was largely determined rather early in the evening. Well, one must set priorities about what is more important, I guess.

On the jump page the day after the election.

On the jump page the day after the election.

 

 

Some are quibbling over the means of conveying an opinion in print

The advertisement

The advertisement

A newspaper is a newspaper. Newsprint is newsprint. An opinion is an opinion.

But apparently some people are aghast that a newspaper would use its newsprint to convey opposition to ballot Question 3 in both an editorial and a series of in-house advertisements.

Online journalism critic Jim Romenesko noted in his blog that the Las Vegas Review-Journal is running so-called house ads that opposed the margin tax or The Education Initiative. He quotes a defrocked newspaper columnist as saying, “I’m sure this will be disclosed in all news stories from now on, right?”

Just as all news stories will disclose that the paper editorially opposed the ballot measure in a Sept. 28 editorial, though its political columnist endorsed the measure a couple of days later? That would take a lot of explaining. The disclaimer about the editorial, the column and the ad would be longer than any story.

The local pundit has since asked whether the newspaper will register with the Secretary of State as a political action committee and disclose expenditures because state law defines a “Committee for political action” as a group “Which does not have as its primary purpose affecting the outcome of any primary election, general election, special election or any question on the ballot, but for the purpose of affecting the outcome of any election or question on the ballot receives contributions in excess of $5,000 in a calendar year or makes expenditures in excess of $5,000 in a calendar year.”

What difference does it make in what form the opinion appears? It takes the same amount of newsprint, which is going out the door and onto the driveway anyway. What cost?

But there is a section of the law that reads:

NRS 294A.370  Media to make certain information available.

      1.  A newspaper, radio broadcasting station, outdoor advertising company, television broadcasting station, direct mail advertising company, printer or other person or group of persons which accepts, broadcasts, disseminates, prints or publishes:

      (a) Advertising for or against any candidate or a group of such candidates;

      (b) Political advertising for any person other than a candidate; or

      (c) Advertising for the passage or defeat of a question or group of questions on the ballot, shall, during the period beginning at least 10 days before each primary election or general election and ending at least 30 days after the election, make available for inspection information setting forth the cost of all such advertisements accepted and broadcast, disseminated or published. The person or entity shall make the information available at any reasonable time and not later than 3 days after it has received a request for such information.

      2.  For purposes of this section, the necessary cost information is made available if a copy of each bill, receipt or other evidence of payment made out for any such advertising is kept in a record or file, separate from the other business records of the enterprise and arranged alphabetically by name of the candidate or the person or group which requested the advertisement, at the principal place of business of the enterprise.

But I doubt the newspaper will bill itself for those house ads.

Never mind that much of the law is clearly an abridging of free speech and press anyway.

That hasn’t stopped the current Secretary of State Ross Miller from pursuing legal action against people for expressing their opinions in public.

 By the way, the URL in the ad VoteNoQ3.com is a link the paper’s editorial on the topic.

The editorial

The editorial

 

 

 

 

Newspaper column: Arguments against margin tax keep piling up

Every time someone kicks over another margin tax rock, a monster comes crawling out.

We’ve already learned from previous studies and analyses that The Education Initiative, or margin tax, on the November General Election ballot might not raise as much revenue for education as promised by backers, that the money raised by the tax could be diverted from education to other uses as lawmakers have done in the past, that it could destroy as many as 3,600 private-sector jobs, would increase Nevada’s effective corporate income tax to 15 percent (nearly double California’s 8.8 percent rate) and inflate consumer prices for everyone.

The Nevada State Education Association managed to gather enough signatures and survive enough court challenges to put before the voters a 2 percent margin tax on all Nevada businesses that gross more than $1 million a year. Some deductions for expenses are allowed. The union has estimated the tax would bring in $800 million a year in additional funding for K-12 education. It will be Question 3 on the ballot, as noted in this week’s newspaper column, available online at The Ely Times, the Elko Daily Free Press and the Mesquite Local News.

The Coalition to Defeat the Margin Tax Initiative — which is made up of retailers, miners, manufacturers and assorted businesses and business groups — recently published another study of the tax’s effects on Nevadans.

This latest study was conducted by Nevada economist John Restrepo and his RCG Economics firm in collaboration with UNLV economist Alan Schlottmann and others.

Restrepo focused on the impact the tax would have on those who own several businesses, because the tax would treat an owner’s various entities as one for tax purposes.

“For example, one person may own a car wash business and a retail store with annual revenues of $450,000 and $600,000, respectively,” the report explains. “Each company is considered an independent business establishment, but because they share a common owner, these companies would be combined into an affiliated group for the purposes of the Initiative” and thus exceed the $1 million threshold.

When those shared-owners are calculated, 16,288 large and small Nevada businesses would be affected by the tax.

Dan Hart, a spokesman for The Education Initiative, has dismissed businesses qualms about the harms of the tax by saying that 87 percent of Nevada businesses wouldn’t be subject to the margin tax, because their gross receipts are less than $1 million.

He fails to mention that nearly 80 percent of Nevada’s small businesses have no employees whatsoever, while those that would be subject to the tax employ a majority of private-sector workers in Nevada.

This latest study in fact estimates the tax will affect the employers of 608,000 workers, representing 63 percent of private jobs in 2013. “On a per employee basis, the margin tax would be an equivalent of  $1,314 per year,” the report concludes.

The study also breaks down the effective tax rate by type of business. When the margin tax is combined with the current modified business tax, the study found a residential home builder would pay a tax rate of 4.7 percent, while a patient care facility would pay 13.8 percent, a construction wholesaler 42.5 percent, some real estate brokers 86.4 percent and family owned restaurants would be taxed in excess of 100 percent.

In light of figures like these, even the Culinary union has come out against the margin tax.

 

Those are merely the current knowns that can be calculated. The report points out that future bottom line impact is incalculable.

“Unless the long-term impacts of the proposed margin tax to the Nevada economy and its residents are clearly understood, a full analysis of the economic and business ramifications of the tax on the state’s economy is not possible,” the Restrepo report concludes. “The proposed margin tax must be measured and evaluated on its impact to Nevada’s economic growth potential, the state’s economic development efforts, and last but not least, on future business investment. Anything short of this lays the groundwork for a potentially bad public policy that would negatively affect the state’s economic future and the lives of its residents.”

The Nevada Taxpayers Association has warned that many businesses are already struggling to survive the recession and “this tax may prove to be the proverbial straw that breaks the camel’s back.”

Anti-tax coalition spokesman Karen Griffin says that “many businesses that sell goods and services in Nevada would pass on their increased costs from the tax to consumers, increasing the costs we pay for food, clothing, health care, electricity, phone bills, and other products and services.”

There is no guarantee that increased spending on education would improve education. In the past 40 years, Nevada has increased inflation-adjusted education spending 100 percent, while SAT scores have fallen.

Columnist has a strange view of how editorial boards work

stevesjpg

In his op-ed column in today’s Las Vegas newspaper, Steve Sebelius uses the term majority a dozen times to refer to a “majority” of the paper’s editorial board and the decision to publish an editorial this past Sunday opposing the margin tax for education, Question 3 on the November ballot. He, of course, endorses the tax and I happen to agree with the editorial stance.

“Sunday’s editorial made the case against The Education Initiative, saying it would be economically destructive across a wide variety of businesses, and that, in fact, ‘it does guarantee a much worse economy.’ In these contentions, I believe the majority is simply wrong,” Sebelius writes.

The column leaves the distinct impression that a newspaper’s editorials are determined democratically by a “majority” of the editorial board members. At all the papers I’ve worked at since the early 1970s, that has not been the case.

People would ask me, when I was editor of the Review-Journal, how editorial decisions were made and I would explain that the editorial board would discuss the various aspects of an issue, the board would vote, and the publisher always won — a majority of one.

There is a tagline at the bottom of the editorial column that reads: “The views expressed above are those of the Las Vegas Review-Journal. All other opinions expressed on the Opinion and Commentary pages are those of the individual artist or author indicated.”

Unless things have changed far more than I could imagine at the R-J, the term “majority” is a misnomer.

In fact, in my current incarnation as a free-lance columnist and editorialist for a string of rural newspapers owned by the R-J’s former publisher Sherman Frederick, this distinction has in fact arisen.

Back in December I penned a column pointing out a better way to reduce the caseload of the Nevada Supreme Court than creating an appeals court, which is Question 1 on the ballot.

But the publisher wanted to endorse Question 1. I told him an editorialist is like a gunslinger or a hooker. Who do you want shot or screwed? The price is the same. (Borrowed from a description a lawyer once used for his profession, but it works in this case as well.)

By the time I finished the editorial I may have convinced myself to vote for the appeals court, since the better solution is not on the ballot and the current situation is untenable.

That’s how it really works at the vast majority of newspapers. It’s hardly a democracy.

(By the way, at this year’s Nevada Press Association contest my columns and editorials won first places in the community newspaper division. I also had first places in both categories while at the R-J. Both of those were deservedly captured this year by Glenn Cook.)