Las Vegas Sun

October 19, 2017

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Assembly takes its first stab at major NV Energy bill

NV Energy has a new deal for Nevadans.

In the most current iteration of Senate Bill 123, NV Energy executives have told legislators that if they get rid of their coal power plants, they should get a 550 megawatt power plant in return, as well as the right to construct or contract for 350 megawatts of renewable energy.

The ins and outs of the plan the utility dubs “NVision” could have large implications for how much you pay on your power bill. But with just a week left in the legislative session, some in the Assembly fretted that they’re trying to pass complicated, significant energy policy with little expertise and no time to make decisions that regulatory bodies normally study for weeks to months before issuing a decision.

The new version of the bill, which was passed unanimously by the Senate, received its first hearing in the Assembly on Monday.

While nearly everybody at the hearing recognized that current political, legal, and economic realities point to the wisdom of exiting the coal market, opponents for the first time criticized the proposal for closing the market to competition.

“We would like to compete,” said Robert Kahn of the Independent Power Producers Coalition of the West. “We spend our own money. They spend yours. That’s a really basic fact to remember. … We want a chance to show we are the least cost producer.”

In addition to concerns that the utility was overreaching by asking the Legislature to loosen regulations, Kahn said the major incentive for the utility is to own and operate power plants so that it can grow its rate base and thereby increase its profits.

He was concerned that the private energy sector-- particularly companies that construct and own power plants-- wouldn’t be able to compete in Nevada’s energy market.

NV Energy customers would pay for utility-owned construction of the new power plants in SB 123 via their power bills. Barclays, a global financial services provider, estimates that the cost could be in the range of $500 million and would increase share values by approximately eight cents per share by 2025.

A group led by former Attorney General Frankie Sue Del Papa also had concerns about higher costs for Nevadans and less regulation of the state’s energy monopoly.

“When we require state purchasing to go to bid to buy pencils, would we allow a multi-million power plant to be built without competitive bidding?” said Marlene Lockard, lobbyist for the Nevada Consumer Protection Alliance.

Supporters of the bill, however, far outnumber the opponents.

Until this week, though, the opponents have had little time to review the various last-minute amendments to the legislation, which were the product of private negotiations between the gaming industry, NV Energy, the governor’s office, and the Attorney General’s consumer protection bureau.

Those negotiations resulted in NV Energy asking for a third of what they’d originally proposed.

“I’ve been asked if the utility shot high in the beginning to get to some compromise,” said Sen. Kelvin Atkinson, D-North Las Vegas, the bill’s sponsor. “I won’t deny that that probably was the case.”

Since the bill’s introduction and its subsequent amendments, the policy of divesting from coal remains a popular one.

Many individuals and groups have come out in support of the bill since its introduction in the Senate several months ago, U.S. Senate Majority Leader Harry Reid, D-Nev., Republican Gov. Brian Sandoval, renewable energy companies, labor unions, environmental groups, and large and politically influential energy users like MGM Resorts International and Wynn Resorts.

They all acknowledge the cost but say it’s a worthwhile investment.

“If we’re going to invest in our infrastructure in our state and renewable energies in the state and close coal plants, it’s going to come at a cost,” Atkinson said.

But supporters say that Nevadans shouldn’t look at that cost in isolation. Mandating a new power plant and opening contracts to bid for renewable energy investment could be less expensive than doubling down on coal.

Nevada currently has to import its coal, adding an extra cost to coal-fired power generation.

“When we invest in renewable energy and divest from things like coal, we keep more of our money in state with our native resources,” said Kyle Davis of the Nevada Conservation League.

Labor unions whose members could gain employment via the construction mandated in the bill supported Senate Bill 123, as did renewable energy companies that could benefit from the bill’s passage.

While the bill passed the Senate in a unanimous 21-0 vote, members of the Assembly provided further scrutiny to the proposal that was not revealed during Senate hearings.

Assemblywoman Irene Bustamante Adams, D-Las Vegas, asked how much the company still owed for the construction of the Reid Gardner coal plant.

NV Energy lawyer Shawn Elicegui said that figure will amount to about $275 million, a cost that ratepayers would bear regardless of whether or not the plant was generating power.

While many interested parties offered amendments to the bill, Atkinson said that working groups spent thousands of hours to reach a deal that would appease all interests.

He said opponents “overly exaggerated” the extent to which the bill would grant the utility an ability to deviate from current regulatory oversight laws granted to the Public Utilities Commission.

Other legislators, however, indicated that they would prefer the PUC decide the particulars of the Legislature’s broad policy directives.

“Typically the PUC will review this sort of thing for months before making some kind of decision,” said Assemblyman Ira Hansen, R-Sparks. “But they expect people like me, a legislator, to make the decision after a 2-3 hour hearing.”

The debate, essentially, is about how the executive branch regulatory agency and the legislative branch of government should get along.

Atkinson said in his closing comments of the bill that “to say that the PUC is in the business of writing policy is inappropriate.”

“That is our job,” he said.

Legislators have until June 3 to finish their work before adjourning.

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