PUC report: Initiative would raise residential power rates
April 30, 2018
Nevada homeowners will likely face higher power rates in the next decade if voters approve the energy choice constitutional amendment, the state Public Utility Commission said Monday.
The commission issued its 110-page analysis, saying the proposed constitutional amendment would likely benefit big business immediately.
But it could end subsidies to low income citizens and pose problems for rural communities.
Voters in 2016 approved a constitutional amendment to end the monopoly of NV Energy and open the door to competition. Seventy-two percent voted in favor of the initiative that must also be approved in the November election.
PUC Chairman Joseph Reynolds said it was asked by an energy advisory committee to investigate the impacts of the constitutional amendment if passed and to become effective in 2023.
Commissioner Ann Pongracz said the next three sessions of the Legislature would have to make changes in the law to protect consumers and to clear up conflicting language between the initiative and existing law.
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Reynolds, who authored the report, said the initiative was "likely to increase the average monthly bill" for consumers for the next 10 years.
But these increases would level off as the open market competition is established.
Large customers, said Reynolds, would likely see an immediate benefit "due to the elimination of an alleged residential subsidy and reduced impact fees."
Nevada has some of the lowest power rates in the nation and it would be the first ever to adopt a constitutional amendment to open competition.
The PUC would be stripped of its authority to regulate rates which could be set by profit driven practices, said the report.
It found $100 million in new start-up costs would be required and there would be an annual $45 million in operating and maintenance costs.
At least 400 union electrical workers would lose their jobs. The new competitors would likely establish new jobs but that's "speculative and un-established," said the document.
NV Energy, according to the PUC investigation, would likely be forced to sell off its assets and energy contracts. Ratepayers would be liable for any loss and that could offset the savings of new competition.
Monopolies such as the communications and transportation industries have been ended in the past but it took years before the problems and procedures were resolved.
Commissioner Pongracz said the upcoming Legislature must allocate at least $200,000 for a further study of how the competitive market would work.
She said each new company should be licensed and a new oversight unit be created to make sure the service is adequate and the consumer is protected.
Eight persons in Las Vegas and Carson City spoke at the Monday meeting of the PUC. All but one who represented Switch, favored the report and advocated it be published statewide to consumers before the November election.
Thomas Bird, president for the Nevada Alliance for Retired Americans, said there's no guarantee in the constitutional amendment electric rates will be reduced.
"There is no provision for low income subsidies," said Bird who predicted small businesses would be forced to close and small communities would be harmed.
Rusty McAllister of the Nevada State AFL CIO, said the deregulation would result "in a high rate of job loss" and many workers can't afford an increase in their power rates.