The Nevada Public Utilities Commission, which is tasked with regulating the state’s monopoly utilities, has put out a 109-page report detailing a litany of things that could go wrong if voters again approve at the ballot box in November a constitutional amendment creating a free market for electricity.
In 2016 voters approved the Energy Choice Initiative by an overwhelming 72.4 percent to 27.6 percent. Because the measure would amend the state Constitution it is back on the ballot this fall for final voter approval, but this time around a coalition headed by the state’s largest power monopoly, NV Energy, has vowed to spend $30 million to defeat it.
The PUC report reads like an in-kind contribution to that effort.
A foreword signed by PUC Chairman Joe Reynolds declares that, while the concept of open markets is quintessentially American, “ensuring a non-stop supply of electricity to every home, business, and governmental entity in Nevada every second of every day of the year, regardless of the weather or economy, makes it unique from other goods and services. Electricity is a basic necessity of modern life. Like air. Like water. Like food.”
Thank goodness for those government regulated monopoly grocery stores.
While Reynolds says the report neither supports or opposes the initiative, the bulk of its findings appear to find fault with the proposal.
The initiative would require the Legislature to pass a law providing an open, competitive retail electric energy market by July 1, 2023. The law must include provisions to reduce customer costs, protect against service disconnections and unfair practices, and prohibit the granting of monopolies for power generation, but could leave in place regulation of transmission and distribution.
One of the chief arguments for the measure is that competition would drive down cost.
But the PUC report claims the proposal is likely to increase monthly electric bills in the first decade of implementation. The bulk of this cost is attributed to the supposition that NV Energy will be forced to divest its generation assets, though there is no language in the initiative even suggesting any such requirement.
The report argues that this presumed divestiture would cost Southern Nevada residential power customers $24.91 a month and Northern Nevada residential customers $6.52, because NV Energy might have to sell off its power plants at a loss. A presumption compounding a presumption.
At one point the report seemingly declares that the system isn’t broken, stating, “Our residential rates are on average, and our commercial and industrial rates are lower than average.”
In its conclusion the report feigns solicitude for the poor residential ratepayer and warns that residential customers might suffer the most if the initiative passes.
“If history and experience are any type of guide, commercial and industrial customers, will fare far better, at least initially, than the average Nevada residential family through this proposed change,” the report states. “Large commercial customers, who currently cannot depart bundled electricity service pursuant to NRS Chapter 704B may financially benefit the most, as they cannot currently access a competitive open marketplace that may offer benefits to high-volume users.”
This is the same PUC that currently sets those residential, commercial and industrial rates.
According to the U.S. Energy Information Administration, which is cited as the source for that earlier mention of low rates on average, the residential rate set by the PUC were the highest among the eight Mountain states in January 2018, while the commercial rate was the third lowest and the industrial rate was the second lowest in the region.
While residents paid 12.36 cents per kilowatt-hour, commercial customers paid 8.04 cents and industrial users paid only 5.28 cents. Thirty-one states have lower residential power rates than Nevada, according to the EIA. Only four states have lower industrial power rates. Only three states have lower commercial rates.
Aren’t you glad your state regulators are looking out for you?
The report does point out a potential legal conundrum. While the initiative creates a “right to sell trade or otherwise dispose of electricity,” it also says lawmakers retain the power to establish “policies on renewable energy, energy efficiency and environmental protection.”
A right would appear to trump a policy. The report asks whether a mining company might have the right to buy power from a coal-fired plant, despite a state law closing all such plants.
In a section on the impact on jobs, the report snidely concludes, “Lots of Nevada attorneys may also gain new work from the Energy Choice Initiative.”