Whither future power bills if voters approve Energy Choice Initiative?

Will power bills go up or down, if voters approve the Energy Choice Initiative on the November ballot? Depends on whose assumptions you believe.

The Nevada Public Utilities Commission, in a 109-page report recently released, claimed passage would cause electricity rates to rise $24.91 a month in Southern Nevada and $6.52 Northern Nevada residential customers, because NV Energy  has threatened to sell off its power generation plants at a loss — even though there is nothing in the initiative requiring such a move.

But a report by the Garrett Group presented to the Governor’s Committee on Energy Choice on Wednesday 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 Garrett report noted that one can’t use current market power plant sales to make projections, because current sales reflect the fact that all retail customers are captive customers of NV Energy. Market sales, if the initiative passes, would change to reflect the fact that customers no longer would be captive customers.

We suspect NV Energy has threatened to sell off generating plants because under the competitive market the initiative would create the company would no longer be guaranteed a 10 percent rate of return on investments and might have to settle for a smaller profit margin unsatisfactory to billionaire company owner Warren Buffett.

Under the initiative the company or some other entity probably would still maintain a monopoly over transmission and distribution along with a guaranteed return on investment.

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.

Voters will have decide who they believe and what is in their best interests. Capitalism or monopoly?

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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.

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.

When men in suits walk the halls of a newspaper

There have been a couple of sightings recently of men in suits being squired around the facilities of the Las Vegas newspaper by a high-ranking executive of said paper’s owner, Stephens Media.

The suits are said to be occupied by representatives of BH Media, one of the Berkshire Hathaway companies owned by billionaire Warren Buffett, one of the new people in the mood and with the wherewithal to buy newspapers these days.

This same high-ranking exec is said to be escorting the suits to two other Stephens Media newspapers this week, or so I hear.

From BH Media jobs webpage

 

Speculating on how the Sun will go down

Stephens Media, owners of the Las Vegas Review-Journal, bungled its last attempt to shut down the joint operating agreement (JOA) under which the Las Vegas Sun is published as separate advertising-free daily section that is hemorrhaging cash.

When the company tried to negotiate a deal with the Greenspun family members who owned the Sun, Brian Greenspun simply bought out his siblings and kept the JOA going, publishing an embarrassing section that is almost entirely syndicated material with a little local sports and entertainment copy.

Warren Buffett

The JOA expires in 2040.

But what if there was no R-J to publish the Sun?

Stephens Media couldn’t just close shop and will have a hard time selling the paper with the Sun albatross around its neck. But what if some media company, say Berkshire Hathaway Media, were to buy the press and the building and the equipment and the circulation list and shut down the R-J and start a new newspaper? Would there be a JOA?

Stephens Media parent Stephens Inc. acted as financial advisor to Van Tuyl Group in October when Berkshire Hathaway bought out the car dealership chain, so the executives doubtlessly are acquainted.

BH Media has been buying lately. There have been rumors about BH Media executives showing up on Stephens Media properties.

On observer noted that owner Warren Buffett, who purchased Nevada’s electricity company, may have a strategy:  “In retrospect, his targeting just the smaller papers is a big clue about his forecast for the industry. Unlike regionals or big-city papers, small-town newspapers don’t have a lot of competition or good substitutes.”

Las Vegas is a fairly small market — and getting smaller in circulation — without a lot of competition.

 

 

 

NV Energy proposes solar project that is laughably too similar to the one already rejected

Is this what passes for horse trading at the power company?

Just more than a month ago the Public Utilities Commission denied NV Energy’s proposal to build a 200-megawatt, $438 million photovoltaic solar power plant on the Moapa Indian reservation, saying the amount of power was nearly four times more than necessary and the cost more than five times higher than necessary.

The PUC said NV Energy did not need 200 megawatts, but only 54 megawatts to satisfy customer needs, and even that could be delayed a few years. Additionally, that 54 megawatts could be provided by spending $85 million on standard combustion turbine technology, not $438 million.

So, having seen the error of its ways, the company has come back to the PUC with a proposal to build 175 megawatts of solar power in the same location, a reduction of 12.5 percent, at a cost of merely $383.3 million, a reduction of 12.5 percent.

What a deal!

The Bureau of Consumer Protection immediately filed with the PUC recommending the modest changes being proposed also be denied. It points out that the original proposal included an economic benefit of $65 million, but this was “far outweighed by the negative impact of $223 million in incremental revenue requirement cost” — or nearly $3.50 in cost to every $1 of benefit.

“Further, the cost of such a plant would cost each residential ratepayer approximately $3.4(0) a month or $40 a year,” the bureau says. “The Moapa Solar plant as proposed would come at a very high price to the consumer in Nevada and be a drag on the economy for years in the future.”

The bureau noted the amended proposal probably would not show a vast improvement in cost versus benefits.

Maybe 12.5 percent less cost?

It is easy to understand the motive behind the power company’s horse trading. The PUC currently allows a return on equity of a little more than 10 percent, though the power company has asked for 15 percent for some recent project. The more equity, the more profits. Do the math: 10 percent of $383.3 million for a solar plant versus 10 percent of $85 million for standard combustion turbine technology. That’s not how NV Energy’s current owner Warren Buffett got to be a billionaire.

The PUC is expected to discuss the proposal on Wednesday.

 

 

 

 

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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