Chamber crowd learns pros and cons of Energy Choice
September 25, 2018
The director of Economic Policy for the non-profit Guinn Center told the Carson Chamber of Commerce Soup's On! audience on Tuesday that no one can say what would happen if voters vote to put Energy Choice in the Nevada Constitution.
Question 3 is on the ballot for the second election cycle and, if approved, establishes a right to energy choice for both business and residential electric power users.
Supporters say the utility market needs competition and that NV Energy's monopoly should be broken up for the benefit of all customers.
Opponents say it would help the big guys lower their rates while residential and small business customers would see increases.
The Guinn Center doesn't advocate for or against policy, rather they study and report findings.
Meredith Levine told chamber members at the Gold Dust West luncheon that, while large electric power consumers, "tend to fare very well regardless of market models," the results for residential and small business customers have been mixed in the states that have restructured to provide competitive markets.
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"No smaller consumer sits around and has specialists in energy to help them walk through this," she said.
As a result, she said small consumers have done well in some states but, in others, have seen significant rate hikes. In a number of states, rate caps and freezes prevented increases in some states but that, once those caps expired, customers experienced hikes in some states that, "in some cases created 100 percent increases."
Levine said 22 states have restructured and two more are considering it. But she said seven states later repealed restructuring all or in part and four are now considering repeal.
Her research paper published by the Guinn Center states that most of the data showing decreased rates in other states was published before those rate caps expired.
"If this were to pass, it would need some very strong consumer protection," Levine said.
She said consumers would need protection from variable rate contracts that change with the price of natural gas, contracts they can't get out of and getting switched to different providers without their permission among other issues.
"In a restructured market what changes is that the Public Utilities Commission would no longer have a role in setting the rates."
She said if there was a spike in natural gas prices such as the one after hurricanes Katrina and Rita, the PUC could no longer protect customers.
Another issue, she said, is what are called "stranded assets" because the ballot question requires NV Energy to sell all its generation assets and get out of the power production market, instead becoming only the transmission and distributor for power. She said if they sell those assets for a profit, that money could be passed on to consumers but, if they sell for a loss, consumers would likely have to pay. Levine said estimates are anywhere from a $1.1 billion profit to the PUC estimate of a $4.4 billion loss to NV Energy.
She pointed out that, in Texas, estimates were for a $2.2 billion benefit to customers but that, ultimately, it was a $9.6 billion loss consumers had to absorb.
Asked about the impact on solar net metering and renewable energy, Levine said there is no relationship between the ballot question and renewables.
"This does not bring more renewables onto the grid and doesn't hinder bringing renewables onto the grid," she said.
But she said the relationship between the initiative and rooftop solar/net metering is more complex. Assemblyman Chris Brooks of Las Vegas passed a bill in 2017 that recreated solar net metering in Nevada.
"Assemblyman Brooks says it (the ballot question) would supercede any pre-existing legislation," Levine said. "It could effectively be nullified by the constitutional amendment. Then there's not actually a provider in the market to give the net metering credits back."
She also said no other state has attempted to enshrine energy choice in its constitution and that, if this doesn't work, it would take "a long time," (four years) to remove it from the constitution.
Gil Yanuck, a member of the chamber executive board, summed up comments by several members of the audience saying with so many open and unanswered issues, it doesn't make sense to pass Energy Choice: "If it's not broken, why fix it."