Editorial: Time to let free market work for electricity

The Energy Choice Initiative — Question 3 on the November ballot — would amend the Nevada 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 it this year.

It had virtually no opposition in 2016 but now NV Energy, the monopoly power company that serves 90 percent of Nevada, is spending $63 million to defeat Question 3. Under the monopoly system, NV Energy is assured a 10 percent rate of return on investments. Profits without risk.

The ballot measure is being pushed by several large power users — chiefly Las Vegas casinos and large mining and data companies.

The opponents of Question 3 make the spurious claim: “In fact, in the 14 states that deregulated electricity, average residential electricity rates are 30% higher than ours in Nevada.”

That is entirely due to factors such as fuel costs that have nothing to do with what a  change to a free market system could provide. The better comparison is to look at how electricity prices have changed over the years since competition was introduced.

According to a 2017 analysis by the Retail Energy Supply Association, the average electricity price in those 14 competitive states fell 8 percent from 2008 to 2016, while the price of power in the monopoly states rose nearly 15 percent.

NV Energy also claims passage of Question 3 would require it to sell off its generating facilities and purchase power contracts at a loss that would have to be covered by ratepayers, but nothing in the language of the amendment requires this. In fact, lawmakers could require NV Energy for a period of time to be the provider of last resort.

NV Energy estimated that it would lose $7 billion by selling assets. The Public Utilities Commission of Nevada estimated those stranded costs could cause electricity rates to rise $24.91 a month in Southern Nevada and $6.52 in Northern Nevada for residential customers.

But a report by the Garrett Group presented to the Governor’s Committee on Energy Choice 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.

Nevada and many other states were well on the way to breaking up their electricity generation monopolies 17 years ago until the Enron market manipulation debacle led to blackouts and price spikes that scared lawmakers into backing off, even though the free market was not the problem. The problem was collusion and manipulation.

According to a Wall Street Journal article at the time, Enron charged California’s Independent System Operator for relieving power congestion without actually doing so. The company also avoided in-state price caps by moving power out of state and then reselling it to California — fraud. Enron violated the rules.

Free markets tend to reduce cost and encourage innovation.

For example, since Pennsylvania introduced a competitive electricity market residential and commercial customers in Philadelphia and Pittsburgh are 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.

Let the free market system do what it does best, vote for Question 3.

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.

NV Energy desperately trying to protect its monopoly status

Why would NV Energy pour $63 million of its money into trying to persuade Nevada voters to reject a constitutional amendment that would end its monopoly on supplying electricity to customers in the state? And since money is fungible, how might they recoup that expense from ratepayers through a pliable Public Utilities Commission that already has basically sided with the utility?

The power company has outspent proponents of Question 3 — the Energy Choice Initiative — by two-to-one.

Yes on 3 Executive Director Dave Chase said in a statement Wednesday that was quoted by the morning newspaper, “This is $63 million that should be used to lower rates for Nevada families. Instead, that money is being used to protect an out-of-state owned corporate monopoly. NV Energy is not spending play monopoly money, they are spending our money, all to protect their bottom line.”

Of course, the major backer of Question 3 is the Las Vegas Sands Corp., which would like to buy cheaper electricity without having to pay a multimillion-dollar exit fee to NV Energy. The casino company is owned by the same family that owns the newspaper, which today editorially backed Question 3.

So, it is billionaire Warren Buffett vs. billionaire Sheldon Adelson.

The editorial rightly points out:

For instance, opponents maintain that states with competitive retail electricity markets have higher prices than Nevada. But they use “average” prices as a comparison tool, a deceiving statistic that ignores the wide range of choices available, including lower-cost options. The more relevant issue is how prices reacted after the implementation of choice. Answer: They’re down. The Energy Research Consulting Group estimates consumers in the 14 states with competition have saved $25 billion in the past six years.

Yes, the big corporations are likely to save millions, but the residential homeowners are also likely to save a few bucks and competition might spur innovation, while a monopoly is content to keep things the same and collect its guaranteed 10 percent rate of return on investments.

(Getty Images via R-J)

 

 

 

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