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December 13, 2017

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Legislature 2013:

Coal politics: Why legislative power play could halt big NV Energy plan


Leila Navidi

Reid Gardner Station, a coal fired power plant in Moapa, is shown on Friday, Dec. 7, 2007.

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 »

NV Energy’s powerful lobbying corps has quietly tried to muster wide support for a major energy proposal at the Legislature, but the choreographed show it hoped to premiere to legislators didn’t go quite as planned.

The gaming industry, the largest energy user in Southern Nevada and a powerful lobbying interest, has expressed serious concerns with the utility’s banner proposal, and Gov. Brian Sandoval’s chief policy adviser and legal counsel resigned in the wake of the governor’s decision to side with NV Energy on the issue.

Less than two weeks ago, the investor-owned utility unveiled a major new initiative to divest from coal-fired power generation and build new natural gas and renewable energy power plants. But NV Energy’s bill also asks the Legislature to lock in a 10-year plan that would require ratepayers to shoulder the costs of the plan and limit the Public Utilities Commission’s ability to oversee any associated rate hikes.

In a final, frenzied push Friday morning to move the bill through a critical committee deadline, NV Energy’s lobbyists met with Sandoval’s staff and major energy stakeholders, including gaming companies and renewable energy representatives.

Christening the proposal “NVision,” the utility had hoped to emerge from that meeting with a public statement of support from the gaming industry and others after reworking their bill to address both stakeholder and lawmaker concerns.

That joint support didn’t materialize. Instead, major industries are gathering intelligence and deciding whether they want to mobilize for what could be a protracted and expensive fight among some of the state’s most powerful industries and lobbyists.

“There are still serious concerns,” said one source familiar with the meeting, who described the gaming industry’s reaction.

Gaming companies are still trying to understand what the utility’s proposal does, how much it would raise rates and how much it would relax regulatory standards that could protect the gaming industry, and all ratepayers, from higher rates.

NV Energy’s lead lobbyist, Pete Ernaut, downplayed the simmering conflict, noting it’s still early in the session and the utility still has time to address the gaming industry’s concerns.

“Let me put it this way: The prospect of NV Energy trying to pass a bill over the objections of its biggest customers is zero,” Ernaut said. “It’s just incumbent on NV Energy to work with customers to make sure they are 100 percent on board.”

Ernaut is in a unique position to do that. He not only represents NV Energy at the Legislature; he also represents the Nevada Resort Association, the gaming industry’s chief lobbying arm.

While NV Energy’s lobbyists fell short of securing gaming’s unanimous support of the bill, they did nail down early support from one critical player: Sandoval.

Jettisoning his traditional strategy of reserving comment on any specific bill as lawmakers debate the particulars of it, Sandoval came out early in support of NV Energy’s plan despite the fact many major stakeholders continue to have serious concerns about the legislation.

Click to enlarge photo

Nevada Gov. Brian Sandoval delivers the State of the State address at the Legislature in Carson City on Wednesday, Jan. 16, 2013.

Following the contentious meeting, Sandoval dispatched his energy adviser, Stacey Crowley, to tell lawmakers at a critical committee hearing that NV Energy’s proposal had the governor’s support.

“The governor supports the bill,” Crowley said in her brief statement to lawmakers on Friday afternoon, shortly before a legislative committee voted to amend NV Energy’s proposal to Senate Bill 123. She also noted the jobs that would be created if NV Energy launches projects to build natural gas and renewable energy power plants.

Crowley declined to be interviewed for this report, referring questions to Sandoval’s press secretary.

In addition to attending the multiple stakeholder meetings Sandoval's staff had called to reach consensus on the bill, Ernaut, who is a friend and top political adviser to Sandoval, said he also personally lobbied the governor for his support.

Sandoval’s press secretary, Mary-Sarah Kinner, indicated the governor’s support isn’t absolute and that he will continue to work with stakeholders to address the issues.

“The governor supports this bill and the development of a plan for a transition away from coal generation,” Kinner said. “That said, this is a complex set of issues and we look forward to continuing to work with the utility and the Legislature on the bill.”

Kinner did not address why Sandoval rejected his traditional strategy of remaining neutral on legislation pending before the Legislature.

The fact that Sandoval would back the utility over the concerns of the gaming industry and others surprised some involved in the process.

Sources familiar with the meeting said Sandoval’s general counsel and chief policy adviser, Lucas Foletta, was pushing the governor to take a neutral approach while the stakeholders hammered out the details of the plan and was critical of the utility’s effort to rush the bill through.

Many in the meeting assumed Sandoval would remain neutral.

“But at some point, he decided to endorse the proposal,” the source said.

Foletta, who declined to comment for this story, tendered his resignation later that day after losing his effort to persuade the governor to remain neutral.

“It's fair to say that it was probably the driving factor," said a source with knowledge of the utility's meetings with the governor's office.

Ernaut acknowledged the utility is making a concerted effort to win Sandoval over early. Last session, Sandoval vetoed a major transmission line bill, largely because it was pushed through in the final hour of the session.

The utility doesn’t want to risk a repeat of that.

Nor do lawmakers.

Click to enlarge photo

Lobbyist Pete Ernaut

Sen. Kelvin Atkinson, the chairman of the Senate Commerce, Labor and Energy committee tasked with working out the details of the legislation, said he had been assured early on that Sandoval would support the measure.

But he declined to say who gave him such assurances, whether it was the governor’s staff or NV Energy’s lobbyists.

“(I) wasn’t going down that road again, like we did all last session, doing all that work, only to get a veto,” Atkinson said.

During the past two weeks, NV Energy lobbyists and company representatives have hosted a frenzy of private meetings with regulators, consumer advocates, large energy users, energy companies, the governor’s office and environmental groups in hopes that it could assemble an invincible alliance of stakeholders to support the bill.

NV Energy spokesman Rob Stillwell said those discussions have been “very positive.”

“I don’t know what somebody might be characterizing as serious concerns,” he said. “Obviously it’s a big issue, but I think they’ve been very positive discussions.”

But the utility has already heard critiques from the state’s consumer advocate and muted concern from NV Energy’s state regulators, the Public Utilities Commission.

While there’s near unanimous support for the idea of getting Nevada off of coal, the actual substance of the bill faces sustained concern from powerful stakeholders.

Despite a significant amendment that Ernaut told legislators was a “product” of discussions with stakeholders, the gaming industry’s neutral position on the bill could flip to opposition if its concerns aren’t met.

“We support the move to eliminate coal, and we look forward to working with NV Energy on how we achieve that and getting a better understanding of what the impacts are to ratepayers with respect to replacing coal,” said Russell Rowe, lobbyist for Boyd Gaming.

Boyd Gaming has reason to be concerned. Ten of the top 20 energy users for Nevada Power, the southern subsidiary of NV Energy, are casinos, according to 2012 data the utility company filed with the federal government.

But the Nevada Resort Association, the organization that represents large gaming interests, still needs time to review the proposal, said Virginia Valentine, the organization’s president.

The complicated proposal is less than two weeks old. The company introduced two versions of NVision within 10 days, both just hours before legislative hearings.

Ernaut repeatedly emphasized that NV Energy’s proposal won’t pass muster if it doesn’t simultaneously keep Sandoval’s support and win the gaming industry’s favor.

“If those issues are not worked out, this bill will not pass,” he said, opening the door for a third amendment to the proposal.

But if gaming wants to limit the bill to a few regulatory changes, he suggested the utility would spike its own proposal.

“If it made the bill no longer makes business sense, then the power company would pull the plug themselves,” he said.

This story has been edited to clarify Ernaut’s role in the stakeholder meetings.

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