It’s time for NV Energy, PUC to embrace future in innovative ways

Sunday, Sept. 27, 2015 | 2 a.m.

The Nevada Public Utilities Commission is dealing with an issue that was nowhere near its radar just a few years ago: How much should customers with rooftop solar systems pay NV Energy for use of its power-distribution grid?

But that issue is small potatoes compared with what lies ahead for the PUC in the quickly evolving landscape of energy generation and distribution. The upheaving of business models is changing how consumers can purchase — or create their own — electricity. For that reason, it’s time for the PUC to make a 30,000-foot assessment of rapidly developing technology and figure out how to meet consumers’ 21st-century expectations with NV Energy’s 20th-century business model.

Imagine, for instance, if consumers could buy their electricity from any one of a handful of competing energy producers, shopping around for the best prices or choosing an electricity vendor based on the source of that energy — coal, natural gas, hydro, thermal, wind, solar or biomass. That type of flexibility is being offered in cities around the world, and it’s becoming more widely accepted in the United States. But Nevada remains old-school when it should seize the future.

It will take a lot of negotiations and open-mindedness, especially on the part of NV Energy, to begin these discussions. But the time is right, now that Gov. Brian Sandoval has made a good call in naming Paul Thomsen the third and newest member of the three-person PUC. Thomsen worked in the geothermal industry before directing Nevada’s Office of Energy. His renewable-energy sensibilities will serve him, and the state, well.

Shaping new strategies and adopting appropriate regulations to recraft our power infrastructure will require the buy-in of the governor’s office, the Legislature and NV Energy — with the PUC serving as the referee to make sure the utility’s investments are respected while guaranteeing customers get the best electricity deals they can. But it’s not like they haven’t gone through the wringer before.

In the 1990s, when Enron Corp. got into the business of selling natural gas and electricity nationwide, Nevada Power (the predecessor to NV Energy) got state approval to divest its generating assets and focus only on the transmission (think towering power lines) and distribution (neighborhood-level) of electricity. It would be the middleman between Enron’s generating plants and customers in Nevada.

But before the utility began the shift, Enron collapsed because of scandalous accounting. The Legislature, which in 1999 had green-lighted Nevada Power’s plan to divest its assets and focus on the delivery side of the business, reversed its decisions in 2001. Nevada Power not only stayed in the power-generation business but began pitching for additional power plants, if not just to accommodate the state’s growth but to make more money. That’s because regulating electricity rates in Nevada (and generally nationwide) is a matter of guaranteeing a fair rate of return — profit — for the power company and its investors based on its assets, while making sure consumers are not being gouged.

The utility’s current model has NV Energy producing electricity through coal and natural gas-fueled generating plants, as well as clean, renewable sources such as solar, and by buying electricity from other companies. The business confronted a new wrinkle in the past year or two with the unanticipated speedy arrival of rooftop solar systems, which had become more economical more quickly than expected. Agreements were struck allowing a relatively small number of customers to buy or lease their own rooftop photovoltaic solar systems while paying NV Energy in order to stay on the grid and have power at night, but there is not yet a long-term resolution to how much future customers should pay the utility. That’s the issue now before the PUC.

As soon as it resolves that question, it will behoove the PUC to take a deep breath, clear its plate and take a long and high view of the future of energy production and delivery in Nevada. And because of shifting strategies and tactics, the PUC will have to be nimble in accommodating the various models that may present themselves.

New York is in the midst of doing this very thing, having launched Gov. Andrew Cuomo’s “Reforming the Energy Vision” initiative. Among its goals is to spur clean-energy innovation, bring new investments into the state and improve consumer choice and affordability. That state’s Public Service Commission (its version of our PUC) is aligning markets and re-examining regulations with the objective of giving customers new opportunities for energy savings, local power generation and greater reliability on safe, clean and affordable electric service. The discussion includes communities creating their own “micro-grids,” greater use of rooftop solar systems and other on-site power supplies including batteries to store solar-generated electricity. In a nutshell, New York hopes to create an integrated energy network with a central grid delivering clean, locally generated power.

This is the sort of innovation Nevada needs to embrace. We strongly urge the Legislature to instruct the PUC to conduct a thorough study of how our electrical systems, services and providers can become more nimble and responsive to changing technology and customer needs. Tim Hay, who was Nevada’s consumer advocate from 2000-05, cautions that NV Energy, with its dinosaur attitude, likely will be more concerned about its own long-term interests than those of its customers. Its role may be diminished but will remain vital in the efficient, reliable and affordable delivery of electricity on the grid, for which customers would still pay.

Nevada is good at embracing the future, whether it’s in providing water, pushing the envelope on slot machine technology or preparing for the advent of electric cars. It’s time to address our access to competitively priced electricity, from a variety of sources, reliably delivered no matter what that source.