NV Energy plans to ramp up clean energy investments in Nevada, but ballot initiative creates uncertainty
NV Energy, Nevada’s largest electric utility, said on Thursday it will add more than 1,000 megawatts of solar energy and for the first time plans to ask regulators to approve a major battery energy storage system in the largest renewable energy investment in the state’s history.
The company’s move toward its goal of serving customers with 100 percent renewable energy comes ahead of a November ballot initiative where Nevada voters will consider creating a competitive retail electric market. An April report by the Nevada Public Utilities Commission (PUC) found that should the ballot initiative pass, it would likely cost the state more than $100 million in new startup costs and raise electric rates for residents for at least the next 10 years.
The initiative, known as Nevada Question 3, would require the state to amend its constitution by reducing regulations on the energy market and establishing an open market where customers can choose their energy provider by 2023. Constitutional amendments in Nevada require two votes and the issue must be voted on again in 2018. The initiative passed by a 72 to 28 margin in 2016.
NV Energy said its proposal involves a direct investment in the Nevada economy of more than $2 billion. The six new solar energy projects it plans in Nevada and three related battery-energy storage resources are expected to be completed by the end of 2021. The company’s integrated resource plan must first be approved by the PUC.
“The six new projects position NV Energy to keep its commitment to double renewable energy by 2023 and, importantly, by diversifying our state’s electricity generation portfolio, will reduce the costs to serve customers,” Paul Caudill, chief executive officer of NV Energy, said in a written statement.
“Work on this resource planning effort began not long after the 2017 state legislative session ended and demonstrates that we are navigating the uncertainties in the current market, given Question 3 on the statewide ballot,” Caudill said.
NV Energy said it has the option not to proceed with its clean energy plan if Question 3 is approved, in order to avoid passing on risks to its customers.
The company said passage of the ballot measure would negatively impact Nevada consumers, who currently see some of the lowest average electricity rates in the nation.
“NV Energy is working with the Coalition to Defeat Question 3 to make sure all Nevadans have the facts about this risky and costly Constitutional Amendment, which has the potential to dismantle an electricity system that already provides low costs, increased clean energy production, great customer service and industry-leading reliability,” said Jennifer Schuricht, corporate communications manager for NV Energy.
NV Energy is part of a group working to defeat the energy choice initiative, the Coalition to Defeat Question 3. Included in the group are former Chairman and CEO of Harrah’s Entertainment Phil Satre, AARP Nevada State Director Maria Dent, Clark County Commission member Marilyn Kirkpatrick, state Sen. Pete Goicoechea (R-District 19), former Nevada Attorney General and Secretary of State Frankie Sue Del Papa, former Clark County Commissioner Bruce Woodbury, Carson City Mayor Bob Crowell and Nevada State AFL-CIO Executive Secretary-Treasurer Rusty McAllister.
No state has ever deregulated its energy market or set energy policy by amending its state constitution, the PUC report notes, as Nevada is considering. If the ballot initiative passes, NV Energy would likely be forced to divest its generating assets and assign its long-term power purchase contracts to new owners.
“Nevada ratepayers will remain liable for any financial losses incurred by NV Energy from these stranded costs, which could foreseeably exceed several billion dollars,” according to the PUC report.
Specifically, combined regulatory and stranded asset costs would equal about $4 billion, the report said, noting that the cost to ratepayers spread out over 10 years would mean that residential customers in southern Nevada would see their monthly bills rise by approximately $24.91 in an open and competitive market.
Other factors highlighted in the report include a potential loss of 400 union jobs at NV Energy, the ability of the government to meet deadlines for implementation while not interfering with existing renewable energy, energy efficiency and environmental protection policies or impeding electric regulators and legislators from imposing a “Universal Energy Charge” to assist low-income households with their power bills.
Proponents of the initiative, Yes on 3, say the PUC report was biased in favor of the energy company. “The PUC has written a one-sided report as a power grab to protect NV Energy’s monopoly and attempt to overturn the will of 73 percent of Nevada voters,” Yes on 3 spokesman Bradley Mayer said in a statement.
The PUC report dismisses comparisons between what retail energy choice might look like in Nevada and other states with competitive retail electric markets, like Illinois, Pennsylvania and Texas. Unlike Nevada, those states rely greatly on nuclear power generation, have higher carbon emissions, little solar generation and higher electric prices for consumers.
And in California, which deregulated electricity markets in the 1990s, the system came to a halt in the early 2000s when an energy crisis forced lawmakers to suspend the right of customers to purchase electricity from non-utility providers until the bonds the government used to purchase power to resolve the crisis were paid off.
Customers in Illinois, Pennsylvania, Texas and California all pay more on average per kilowatt hour for electricity than Nevada, the PUC noted in its report.
