Amendment scraps RPS increase, but industry experts predict higher burden on ratepayers
LAS VEGAS — Several renewable-energy bills moving forward in the Nevada Legislature will lead to higher energy rates, say consumer advocates and industry experts.
“We’re not opposed to closing [coal-powered] plants,” said Dan Jacobson, an advocate with the Attorney General’s Bureau of Consumer Affairs, “but we’re concerned the replacement options are inappropriate and could increase the costs to ratepayers.”
Jacobson is referring to SB 123, which would put into effect an NV Energy proposal dubbed “NVision.” The plan would gradually move the company’s energy portfolio away from coal-powered plants to an increasingly renewable-based portfolio. During the session, the bill’s estimated impact on rates has been heavily debated in the Senate Commerce, Labor and Energy committee.
For Nevada Journal, NV Energy described the rate increase as 1.65 percent per year. According to Rob Stillwell, a company spokesman, “The difference [in the increase] is small compared to what you’d see without NVision.”
Nevada currently has the highest electricity prices in the Intermountain West, and, behind California, the second highest in the Continental West, according to the federal Energy Information Administration. Under its “NVision” plan, says the utility, rates in the state will grow at a rate less than inflation, but slightly higher than under the current plan employing coal-powered plants.
(Chart provided by NV Energy)
After NV Energy unexpectedly introduced “NVision” during the middle of the session, the company has proposed changes to the plan and has worked to convince lawmakers that higher power rates are in the best interest of ratepayers.
During the April 3 Senate committee meeting, Sen. Mark Hutchison, R-Las Vegas, repeatedly questioned the viability of NV Energy’s plan. And during the April 12 committee hearing, Sen. Justin Jones, D-Clark County, voiced what he called “serious reservations.”
“I have some serious reservations with putting the burden on [state legislators] to make business decisions for a publicly traded company,” said Jones. “We’re shackling the PUC in their ability to do what makes the most sense for the utility and the ratepayers.” Nevertheless, the committee passed the bill that same day.
The debate over the bill has been so divisive that it reportedly played a role in the recent resignation of Gov. Brian Sandoval’s general counsel and policy director, Lucas Foletta, after Sandoval indicated his support for NV Energy’s plan.
Laurence LaForge, a Reno-based scientist and specialist in wind-turbine technology, says he thinks rates will “absolutely” increase, due to the burden state government is placing on the energy sector in Nevada.
“You’ve got portfolio standards and capacity factors from some technologies that aren’t as reliable as traditional power sources,” said LaForge. “The market should be dictating which technologies succeed, but the government isn’t allowing optimum market conditions.”
LaForge referred to the state’s Renewable Portfolio Standard (RPS), which mandates that a utility provider must generate at least 25 percent of its energy from renewable sources by 2025. This “25 by 25” standard, however, has also been debated this session because of Senate Bill 252.
SB 252 originally required the state to increase the RPS to 35 percent by 2025, making it one of the most demanding RPS mandates in the country. Earlier this year, U.S Senate Majority Leader Harry Reid advocated for the increase when he addressed the Nevada Legislature.
“The standard isn’t a ceiling. It’s the minimum we should be doing for Nevada’s future,” Reid opined.
During subsequent committee meetings, however, an amendment deleted the section increasing the RPS. When the Senate Commerce, Labor and Energy Committee passed the amended bill on April 12, it kept the RPS at 25 percent.
Proposing the amendment had been the Clean Energy Project, a nonprofit that promotes green-energy policies and is a past sponsor of the National Clean Energy Summit, which Reid hosts annually in Las Vegas.
Lydia Ball, the Clean Energy Project’s executive director, told Nevada Journal the amendment was a compromise with various lawmakers and other interest groups, including NV Energy, and that CEP’s main priority was “cleaning up” the law by eliminating “loopholes” that utility companies use to comply with the RPS and keep down power rates.
“Reforming and creating a more straightforward [RPS] is very important if we want to achieve a regional energy market,” said Ball. “This was a hotly debated bill and [committee chairman] Senator [Kelvin] Atkinson did a great job of hearing the bill and taking every proposal into account.”
One of the so-called “loopholes” removed from the bill was the ability for a utility company to use older renewable-energy systems — those constructed prior to 1997, the year the RPS was first established — to satisfy state requirements in the future.
Ball said the RPS was “created to promote new clean-energy developments,” so using older facilities that produced renewable energy for compliance with the Renewable Portfolio Standard was a way of short-changing the law’s intention.
NV Energy has said it supports the RPS and will work to comply with the law, but the company has also indicated its preference for more free-market-driven policies regarding renewable energy.
“NV Energy supports strategies in which the prices paid for renewables are driven by a market-based process in order to obtain the best value for customers,” NV Energy lobbyist Judy Stokey testified at a Senate Commerce, Labor and Energy committee hearing during the 2011 legislative session.
Company spokesman Stillwell told Nevada Journal it’s NV Energy’s job to “abide by the law, regardless of how it’s written.” However, he did say that NV Energy didn’t support the originally proposed RPS increase, given the extra costs it would impose on company customers.
“We’re happy with the [amended] bill. We raised some initial concerns over the [RPS] increase, because we thought it would negatively impact our customers,” he said.
“We’ve been using renewable energy prior to 1997, so we’re very proud of that, but at the same time we want to make sure we’re finding ways to provide the best value to our customers.”
LaForge argues that the fact there were so many special provisions in the law is a sign that the RPS shouldn’t be necessary in the first place.
“The government shouldn’t have to force different requirements on the market,” LaForge said. “Eventually, we’ll develop effective technology and the market will dictate whether we’ve got it right or not.”