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?

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

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.

 

 

 

 

 

A rare example of how tax money should actually be spent

Rhubarb

Hey, Warren Buffett, how’s the rhubarb crop this year?

The Nevada Legislature set up Buffett to make millions in profits from his newly acquired toy, NV Energy, by passing a law that requires lots of capital investment in new power plants — mostly wind and solar. The more investment by the monopoly utility the more return on equity.

But for how long?

As I’ve suggested in the past, who needs a power grid when everyone can produce — and store for later — their own power? People could generate power with wind and solar technology. They just need the ability to cheaply store the power when the wind doesn’t blow or sun doesn’t shine.

I quoted the Edison Electric Institute awhile back as saying:

“While we would expect customers to remain on the grid until a fully viable and economic distributed non-variable resource is available, one can imagine a day when battery storage technology or micro turbines could allow customers to be electric grid independent. To put this into perspective, who would have believed 10 years ago that traditional wire line telephone customers could economically ‘cut the cord?’”

So, where’s rhubarb, Bub?

Greenwire is reporting today that Harvard University researchers have created a low-cost battery that could power a home or backup wind farms and solar panels.

The battery uses quinones which are common organic molecules that plants and animals use to store energy. The team sorted thousands of quinone molecules to find the best for a battery, and the one they settled on is almost identical to one found in rhubarb, the common bitter vegetable.

“The whole world of electricity storage has been using metal ions in various charge states, but there is a limited number that you can put into solution and use to store energy, and none of them can economically store massive amounts of renewable energy,” Greenwire quotes Roy Gordon, a professor of chemistry and materials science at the Harvard School of Engineering and Applied Sciences.

The Energy Department’s Advanced Research Projects Agency-Energy provided $590,000 for the project — much less than was blown on all those “green” energy companies that went bankrupt. That’s where tax money should be spent — research, not padding the pockets of cronies of Obama and Harry Reid.

The team’s findings were published today in the journal Nature.

Does NV Energy think its customers are this gullible?

Can I get all my power from the Reid Gardner coal-fired power plant in Moapa? (Photo by Kent Harper)

Here is the lede on an Associated Press story posted on several television station websites in northern Nevada:

“Northern Nevada customers of the state’s largest utility now have the option of getting all their electricity from renewable sources.”

The story goes on to say NV Energy has announced that customers can opt to get 50 percent or 100 percent of their electricity from renewable resources, though sadly this planet saving service is not yet available in southern Nevada.

But this “green” program will cost you some green because green energy costs more to generate. The AP tells us a typical residential customer using 746 kWh a month will have to pay an additional $15.70 a month to get half of the home’s power from renewables, while 100 percent will cost $31.40 more.

It turns out those new smart meters must be really, really smart. If a power line runs down my street, and I participate in this green program but my neighbor doesn’t, how does it know which clean electrons to deliver to my house and which dirty ones to deliver to my neighbor.

Will NV Energy come up with a billing system in which I can opt to buy only cheaper power from coal-fired plants while they last?

A press release on the NV Energy website perpetrates this hoax further.

“Many customers, big and small, have expressed an interest in buying more renewable energy. This gives them a new way to do that. This option will be especially helpful for those who want to be greener, but did not have easy options that suited their circumstances, such as renters and students. This new program is as simple as going to the NV Energy website and signing up,” declares Bobby Hollis, the executive in charge of NV Energy’s renewable energy programs with an apparently straight face.

The upcharge amounts to an additional 4.2 cents per kWh.

The press release then switches from saying customers would be “buying” green energy to saying they would be “investing” in it — perhaps a bit more accurate term. NV Energy’s current green energy mix in northern Nevada is 85 percent geothermal, 10 percent solar and 5 percent hydroelectric energy. The company was required to “invest” in this green power by law.

The press release continues:

“Hollis said that customers who select one of the NV Green Energy options will be helping develop new renewable energy projects in Nevada sooner than would occur if renewable energy was only being used to meet the minimum requirements of Nevada’s renewable energy law. At present, 18 percent of the electricity produced in Nevada is required to come from renewable energy. Nevada law requires that 25 percent of the total must be from renewable energy sources by 2025.  Renewable energy purchased by customers participating in the NV Green Energy rate will add to that amount and require more renewable energy use in Nevada.”

So if you would like to make a donation to NV Energy’s future owner, Warren Buffett, go to NV Green Energy Choice and sign up.

Power company customers having their pockets picked coming and going

Reid Gardner coal-fired plant is being shut down early by lawmakers.

My ol’ Pappy used to drawl, “Ya pays ya money and ya takes ya chances, but mostly, ya just pays ya money.”

This appears to be the case with Nevada’s electric power company, NV Energy, which is being swallowed by the maw of Warren Buffett’s MidAmerican Energy Holdings Co.

According to consumer advocates, NV Energy has been sticking it to customers for years with something called “The Transformation,” which has resulted in doubling of company-owned generation capacity — the cost of which is passed on to consumers.

Then there was the company-backed Senate Bill 123 that tosses the company into the briar patch by ordering it to prematurely shutdown coal-fired power plants and build gas-fired and renewable energy generating capacity — the cost of which will be passed on to consumers.

Now, it turns out, MidAmerica is paying an acquisitions premium of $2 billion to acquire NV Energy — and wants to pass along a large portion of that to, you guessed, consumers.

According to testimony presented to the Public Utilities Commission, which putatively regulates the monopoly power company when state lawmakers aren’t usurping that role, NV Energy stock was selling for $19.28 a share on May 29 and MidAmerican offered $23.62 a share the next day.

Dan Jacobsen, a technical staffer at the Bureau of Consumer Protection in the office of the Attorney General, testified to the PUC that customers should not be required to share the acquisition cost as the two merging companies are trying to do.

Jacobsen noted that power company customers are already paying capital costs for company-owned capacity that sits idle half the year. Further, residential customers are picking up an undue share of company costs. Almost half of NV Energy’s revenues come from residential ratepayers who use only a third of the company’s electricity.

Strangely, a number of passages in Jacobsen’s written testimony are redacted, supposedly as trade secrets. “Many confidential Company documents from the application (for merger) indicated that NV Energy is an attractive acquisition candidate because of the opportunity the new owners will have to …” The next 11 lines are blacked out, but apparently the gist of the redacted content is: Stick it to the ratepayers but good.

Redacted testimony before PUC.

The first line after the redacted matter is: “It seems clear that part of the attractiveness of acquiring NV Energy is the opportunity to further expand rate bases.”

Jacobsen recommends, among other things, an immediate $30 million reduction in the rates NV Energy charges customers. He further recommends delaying the construction of any new capacity until 2020.

He points out the coal-fired units being taken off line near Moapa aren’t being used frequently. The most used unit operates less than 50 percent of the time and one operates no more than 6 percent of the time.

Redacted testimony to the PUC about the cost of SB123

Nevadans already pay the highest rates in the Mountain West and may see even higher rates in the future.

From testimony of Bureau of Consumer Protection before the PUC

And who do you think will be expected to pick up the $59 million in cash payments to NV Energy execs after the acquisition?