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May 20, 2019

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NV Energy’s planned natural gas power plant sparks rate-hike fears

NV Energy Building Exterior

Steve Marcus

Exterior view of the NV Energy building Monday, Oct. 20, 2014, in Las Vegas.

NV Energy plans to build a 706-megawatt natural gas power plant that could cost ratepayers up to $1 billion, according to a request it made in a 4,493-page filing with the Public Utilities Commission.

A spokesperson for NV Energy declined to comment on the proposal, which was made as part of a study required every three years on supply costs. In the documents, the company described the new power plant as its “preferred plan.” The company asked the commission for authorization to spend $2.4 million to study designs, air quality effects and transmission options should the plant be built. The PUC will vote on the proposal before the end of the year.

Kevin Geraghty, NV Energy vice president of generation, said in testimony that the study would be “necessary to prepare and make a filing with the commission in the future.”

The new plant would be built by 2020 in North Las Vegas adjacent to an existing natural gas plant that the utility plans to acquire from the Southern Nevada Water Authority this year.

The company currently operates or has long-term agreements to buy power from 16 fossil fuel power plants, including coal and natural gas. The new plant would likely help replace the output of the company’s coal facilities, which NV Energy, owned by Warren Buffett's Berkshire Hathaway, will phase out over the next four years.

The proposal for the new plant has drawn criticism.

Some argue the new facility is unnecessary based on current demand trends, including the potential exit of three Nevada casino operators and the increase in rooftop solar generation. “NV Energy has every right to make a profit,” said Randi Thompson, state director for National Federation of Independent Business, which represents 2,000 Nevada businesses. “But we have to look at the reasonable costs to consumers.”

NV Energy customers pay the highest rates in the Mountain West, according to the Energy Information Administration. “The company’s efforts appear to be driven by a desire to add to its rate base to increase earnings,” said Mark Garrett, an energy consultant working with MGM Resorts on its efforts to cut ties with NV Energy. “It should be looking for ways to lower rates, not raise them.” Garrett estimated that construction of the new plant could increase ratepayer costs by $70 million per year.

The Attorney General’s Bureau of Consumer Protection, which acts as a watchdog for ratepayers, declined to comment on the case, but said that it would be testifying on the topic in October.

For Star West Generation, the proposed power plant is bad news. The company supplies NV Energy with natural gas power from its Arizona power plant from June through September — the highest demand periods in the year. That agreement ends in 2017, and it seems likely that NV Energy will not renew it. Star West has offered to sell the plant to NV Energy, saying that move could save ratepayers money, but NV Energy has not indicated it would take Star West up on the offer.

Malcolm Jacobson, president and CEO of Star West, said he is worried about the lack of specifics in NV Energy’s three-year plan. “NV Energy has wheeled their Trojan horse of a plan up to the gates of the PUC and on the inside is a billion-dollar surprise for consumers,” he said.

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