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September 1, 2014

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Consumer watchdog: NV Energy plan will drive up rates, guarantee profits

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Sam Morris

The coal-fired Reid Gardner Generating Station near Moapa is shown April 5, 2007. The spots near the smokestacks are “ghost” reflections of the lights on the plant, which can occur in digital cameras while shooting a point light source.

Reid-Gardner Generating Plant

Reid Gardner Station, a coal fired power plant in Moapa, is shown on Friday, Dec. 7, 2007. Sierra Pacific was fined a million dollars and required to install $85 million worth of new pollution control technology at the plant. Launch slideshow »

A new initiative unveiled today by NV Energy calls for a major shift from unpopular and increasingly expensive coal production to cleaner types of energy.

But at what price?

The Attorney General’s Bureau of Consumer Protection says that rates would rise precipitously under NV Energy’s proposal to replace its coal plants with a mix of natural gas and renewable energy generation.

The utility’s “NVision” plan mandates acquisition, construction and ownership of more than 2,600 megawatts of natural gas and renewable energy, along with transmission and gas lines related to that development.

The construction activity should be a windfall for NV Energy shareholders, said Dan Jacobsen of the Bureau of Consumer Protection.

“This is in effect a guarantee that the company gets to keep adding to their profits,” he said.

The utility would recoup costs from retiring its coal-fired generation while also reaping the benefits of new construction investment, which Jacobsen estimates will cost ratepayers more than the current plan to close Reid Gardner in 2020.

The NV Energy plan would shut down three-quarters of Reid Gardner six years faster, in 2014.

“Within 10 years, this would cause rates to go up 8 percent at a time that, frankly, rates should be coming down,” he said.

NV Energy contends that its plan would increase rates by less than 4 percent over 20 years.

The plan already has preliminary support from labor unions, renewable energy proponents, and environmental groups.

“If there’s a way that we can get this done and get coal out of the mix, we love the idea,” said Kyle Davis with the Nevada Conservation League, who stopped short of endorsing the proposal because he has not read it yet.

The Sierra Club voiced its support for several aspects of the proposal in a statement released Wednesday.

“With this legislation, NV Energy unequivocally acknowledges that Nevada wants and needs to leave coal behind,” said Jane Feldman, Sierra Club state Energy Task Force chair. “Closing the Reid Gardner coal plant would clean up Nevada’s air pollution and reduce health risks for thousands of Nevadans.”

The energy company has sold the proposal as an emissions reducer and jobs creator.

It’s gained the support of the AFL-CIO, whose leaders are excited about the 4,700 construction and 200 maintenance and operation jobs that NV Energy says its proposal will create.

What’s more, NV Energy will go before lawmakers to argue the jobs will go to Nevadans to build power generation capacity in Nevada for Nevada.

“It’ll be a huge boost to the economy of Nevada,” said Danny Thompson, executive secretary treasurer of the Nevada State AFL-CIO. “Those are real jobs; those are Nevada jobs, and those are Nevada taxpayers.”

A copy of the NV Energy plan obtained by the Las Vegas Sun says the company will make “commercially reasonable efforts” to build the natural gas and renewable energy capacity.

Lydia Ball, executive director of the Clean Energy Project of Nevada, said she’s seen the NV Energy proposal and is excited about the idea that Nevada could be out of the coal business by 2026.

“The overarching goal of divesting ourselves from coal resources is absolutely commendable, and I applaud their decision to do that,” she said.

Adding 600 megawatts of renewable energy — geothermal, wind and solar — to help replace that coal energy is “nothing to sneeze at,” she said.

The initial NV Energy proposal, however, also ties the hands of the state’s Public Utilities Commission, because it essentially puts the utility’s 10-year resource plan in state law, she said.

Jacobsen said the proposal would give the commission little latitude in changing the utility’s plan to build natural gas and renewable energy capacity.

“It takes the commission out of the equation and says by mandate that they will build this whether it’s needed or not,” Jacobsen said.

Although the commission has some oversight over the utility under the proposal, it would be largely powerless to regulate the utility, he said.

That’s because the proposal also says its plan “shall be deemed to be a prudent investment,” thereby precluding the commission from deciding what’s prudent or necessary, he said.

“What this is is the plan to guarantee NV Energy’s profits,” he said.

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  1. "NV Energy contends that its plan would increase rates by less than 4 percent over 20 years."

    If that is what they are saying than sign them to a contract and hold them to it.

    I can live with 4% increase over 20 years.

    Let them run with it.

  2. vegaslee wrote,

    "NV Energy contends that its plan would increase rates by less than 4 percent over 20 years."

    If that is what they are saying than sign them to a contract and hold them to it."
    ~~~~~~~~
    I'm for holding them to it, under the law with no out!