Las Vegas Sun

May 21, 2019

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Question 3:

Both sides of busting Nevada’s energy monopoly emphasize consumer protection

More than 150 energy plan options cropped up during a recent search of a Texas website that is touted as a model for Nevada and other states considering energy choice.

“I never get past the first page,” said Pat Wood, the former chairman of the Federal Energy Regulatory Commission who helped restructure the Texas electric market as a public utility commissioner. “I just look at the cheaper ones.”

Supporters of Nevada’s November ballot Question 3, which would tell the Legislature to restructure the state’s market to end NV Energy’s monopoly, say the time spent navigating these choices is an investment in future energy savings. Opponents are concerned that customers would be vulnerable to bad actors looking to take advantage of consumers, such as providers offering plans that start low but have built-in rate increases.

The 150-plus options were laid out across multiple pages on in a demonstration by Wood based on use and renewable sources. If one of those companies would attempt to game the system and take advantage of consumers, there would be deep consequences — the agency can issue fines up to $1 million daily, Wood said. Until 2005, the fine was just $10,000.

Wood and other supporters of energy choice in Nevada say the state has had an opportunity to learn from the mistakes of other states, such as the rocky rollout in California. The Texas website is based on the one in Pennsylvania.

“My favorite line in history is, ‘Pioneers get shot, settlers get the land,’” Wood said. “I’m happy with being No. 2.”

Nora Brownell, who is also a former member of the regulatory commission, said that when she was a member of the Pennsylvania Public Utility Commission during its energy choice transition, there was a tremendous outreach effort. A toll-free number set up to field consumer questions had to be outsourced to handle the calls, with the state eventually quadrupling the size of its customer service line, Brownell said.

“We had a massive consumer education program,” she said. “It was run by the PUC, not by the utilities, because the utilities were giving out bad information.”

NV Energy has put $12.7 million in cash and in-kind donations into the Coalition to Defeat Question 3, while Switch contributed at least $12.6 million to groups that support Question 3, according to filings with the Nevada Secretary of State. Should energy choice be approved, supporters and opponents say the Legislature would need to act in three sessions to create a restructured market, put consumer protections in place and set up a website and customer service mechanism so that residents can shop and have a resource to help them navigate the system.

The ballot question gives lawmakers a deadline in 2023 to create the new market structure.

Nevada changed its law to allow certain consumers to opt out of NV Energy, which charges millions in exit fees. Switch is one of the companies to do so. Many rural areas statewide are members of cooperatives to provide energy.

“They are essentially offering their customers at-cost service because they are member-owned organizations,” said Peter Koltak, campaign manager of the Coalition to Defeat Question 3. “And they’re the only provider in the area, so they effectively have an exclusive franchise on the area. If the constitution essentially takes that away from them, they may disappear, those customers are at the mercy of whatever for-profit provider decides that they can figure out a way to serve the most expensive customer.”

NV Energy President Douglas Cannon said the company has decided not to raise rates and hasn’t since 2013. Rate cases required every three years have not asked for additional operations revenue since 2013, with no intent “to ask for additional revenue in the foreseeable future.” The company’s current rates are 15 percent lower than they were in 2009, he said.

Opponents of energy choice say the restructured market would jeopardize Nevada’s expanding renewable energy portfolio as well as net metering, a credit program for solar customers that was restored in the 2017 legislative session. Wood said Texas became a leader in renewable energy and Brownell said Pennsylvania added wind energy after restructuring, all driven by consumer demand.

NV Energy is proposing a batch of renewable energy projects contingent on the failure of Question 3. Switch is slated to roll out a solar project regardless of whether the voters approve a restructured market.

Nevada is the first state pursuing a restructured market via constitutional amendment, meaning legalization and repeal require passing two votes. Nevada first approved energy choice in 2016 with more than 72 percent of the vote.

Guinn Center director of economic policy Meredith Levine is the lead author of a recent report on energy choice that said the proposal carries uncertainty, with success dependent on consumer protections and oversight. Supporters of Question 3 say energy choice will lower rates by creating competition, while opponents argue that customers will ultimately be paying more because they’ll bear the burden of paying for implementation costs.

“What we see here is a very clear sense from both sides of this is what will happen,” Levine said before the report was released. “What we want to say here is we have no idea what will happen.”