Legislature OKs casino-backed emergency bill on energy policy

By Kyle Roerink

Published Monday, June 1, 2015 | 7:10 p.m.

Updated Monday, June 1, 2015 | 11:35 p.m.

Using an emergency bill in the final hours of the session, the casino industry won a hearing to debate the number of large-scale solar facilities NV Energy will build in the coming years.

The bill, introduced publicly on Monday morning, unanimously passed both chambers and did so in less than nine hours. It was an eleventh-hour clash between clean energy advocates and the casino industry on how much generating output the utility should build and charge ratepayers for in the coming years.

The push intersects with attempts by the state’s largest power producers to buy and create power without the utility. Wynn Resorts, Las Vegas Sands, MGM Resorts International and one tech company, Switch, all filed applications in the past year to end their current agreements with the utility in an effort to save money by purchasing and creating their own power.

Supporters of the measure question the need of new generation. The potential exodus by the casinos and Switch could free up around 370 megawatts of power, which equates to nearly 500 Super Walmarts worth of electricity.

“There is no sense in overbuilding,” Richard Perkins, a Wynn lobbyist and former Assembly speaker, said. “If we overbuild that is a cost to all ratepayers.”

The legislation, AB498, would freeze plans to build a 100-megawatt solar installation and two other solar projects by requiring the Public Utilities Commission to determine their necessity before the power company offers bids to contractors.

The emergency measure addresses concerns that the PUC and Bureau of Consumer protection had in 2013 when legislators passed a law that asks the utility to generate 350 megawatts of energy from new renewable facilities. The law also closes the Reid Gardner power plant by 2017 and cuts the power company’s ties with a coal plant in Arizona by 2019. Three-fourths of Reid Gardner officially closed in December.

Statute currently asks the utility to issue competitive bids to solar companies to build certain projects to meet the 350-megawatt threshold. It doesn’t have any requirements limiting the construction of the plants. The PUC, though, can oppose the utility’s projects after the competitive bid and a hearing. The commission opposed a solar projected in October currently outlined in law. The utility has already issued competitive bids on 200 megawatts of the requirement.

“The legislation is not meant to alter items currently in process,” Tony Sanchez, NV Energy senior vice president of government and community strategy, said in reference to the closing of the coal plants and 200 megawatts of solar. The utility supports the current measure.

This bill ensures the PUC has the authority to see what the need is, Dan Jacobsen, technical staff manager for the state’s Bureau of Consumer Protection.

“You need to build enough capacity to meet demand,” he said. “But, particularly in Southern Nevada, demand spikes in summer, and the rest of the time you don’t need that much capacity.”

Jacobsen said the utility and the PUC should consider the wholesale market to buy power when demand hits its peak.

For advocates of renewable energy, the bill came as an unnecessary surprise.

“The law only requires [a bid] be issued,” Kyle Davis, a lobbyist for Interwest Energy Alliance, said. “It does not require any construction. It does not require projects to go forward if it is not found in the public interest. So we are not sure why we need to bring this bill this session at this late hour.”

The measure that ended coal-fired generation and mandated more renewables, SB123, was a multifaceted victory in the 2013 session. Environmentalists praised the reduction of coal emissions. The utility was able to increase its generating capacity with a mix of renewables and natural gas.

The PUC and lawmakers, though, were concerned that instituting legislative mandates may be problematic in the long run.

Assemblyman Ira Hansen, R-Sparks, opposed SB123 two years ago, saying that he questioned the lack of PUC oversight in the bill. Assemblyman Randy Kirner, R-Reno, also opposed the measure for those reasons.

“Looks like we are being exonerated,” Hansen said to his colleague.

The PUC declined to comment.

The potential departure of the casinos was not in the discussion when the current law came into effect two years ago. The ability to leave stems from a 2001 law put in place after the Western Energy crisis caused by Enron, the defunct energy company that manipulated market prices and caused a near bankruptcy of Nevada power providers 14 years ago.

At the time, lawmakers wanted companies who consume more than 1 megawatt of energy to build generating capacity to provide more stability in the state’s energy market.

As a way to protect all ratepayers, companies must pay an exit fee to leave the utility.

Critics say that companies may pay less if the PUC blocks some projects, which means ratepayers won’t be charged for new infrastructure.

The PUC’s regulatory operations staff suggested Switch pay $27 million to end its current agreement with the utility. The Bureau of Consumer Protection agreed with the number. The casinos, which have all filed with the PUC in the last month, will soon be debating exit fees with the PUC. Caesars Entertainment has informed NV Energy that it will file an application to depart.

“Be prepared for a lot of tension for how big these fees are,” Jacobsen said.

For some renewable activists, the measure is not about money or effect on ratepayers. It’s about producing less emissions.

“The Legislature wants to eliminate a chunk of Reid Gardner’s replacement power by cutting into the clean energy guarantee,” Marta Stoepker, spokeswoman for the Southwest chapter of the Sierra Club. “This will only lead to greater reliance on dirty fuels and hurt the clean energy job opportunities that Nevadans were promised.”