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January 27, 2015

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Proposed solar contract between state, politically connected company raising questions


Steve Marcus

Nellis Air Force Base hosts one of the nation’s largest solar photovoltaic systems. The state is considering switching to solar power for a significant number of its buildings and facilities.

Gov. Jim Gibbons

Gov. Jim Gibbons

The state is considering switching to solar power for a significant number of its buildings and facilities, even though critics question whether the change would save taxpayers money.

A politically connected Sparks company would have the first right to develop solar projects on 53 government properties and sell the generated energy back to the state, under the proposal Nevada officials are evaluating.

The four-year deal with GA-SNC Solar could spur $300 million in private investment, according to the state energy office. GA-SNC Solar is a partnership between international solar company Gestamp Solar and Sierra Nevada Corp., a Northern Nevada defense contractor that has been a heavy contributor to elected officials, including Gov. Jim Gibbons.

The company’s competitors and elected officials have expressed concerns about the deal. A competing bidder has appealed a state committee’s recommendation that GA-SNC Solar’s proposal receive the highest score among eight proposals. Another competitor said the company’s price estimates are significantly higher than electricity available from NV Energy.

A decision on the agreement between the state and GA-SNC Solar was delayed this week by the Board of Examiners, which is made up of the governor, attorney general and secretary of state. Attorney General Catherine Cortez Masto requested a decision be postponed until her consumer advocate can evaluate the costs.

Commercial Solar Services, a competing company in Reno, argued in a letter to the state that the price of energy under GA-SNC Solar’s contract, at 17 cents per kilowatt hour, would be 54 percent higher than what the state pays NV Energy.

To bolster its argument, Commercial Solar cites a contract that GA-SNC Solar-partner Sierra Nevada secured for a 2.6-megawatt solar project at a Nevada Army National Guard facility. According Commercial Solar Services’ letter, the National Guard is paying 18 cents per kilowatt-hour from that project, compared with the 11 cents per kilowatt-hour it paid before the installation.

Energy Director Jim Groth, who served in the Guard before Gibbons appointed him the state’s energy director, said Commercial Solar’s numbers are incorrect and that the state will save money in the long run under GA-SNC Solar’s contract.

“The truthful crux of the matter is that whiners in Nevada spew baseless, unfounded data and the press ... gives it merit,” Groth said in an e-mail to the Sun.

Assemblywoman Debbie Smith, D-Sparks, incoming chairwoman of the Ways and Means Committee, said she wants to make sure “all contracts are open and fair.”

“We better make sure any contract or any new program we’re implementing is saving the state money, certainly not costing the state money,” she said.

GA-SNC Solar would have the right of first refusal to convert to solar power a variety of state buildings in Northern and Southern Nevada, including in parks, Department of Motor Vehicles offices, and higher education and state office buildings.

Ties between Sierra Nevada and Gibbons and his then-wife, Dawn, made headlines early in his term when it was revealed Sierra Nevada had paid $35,000 in consulting fees to the former first lady while Gibbons was in Congress helping the company secure defense contracts.

A representative of Sierra Nevada said the proposed contract with the state went through a competitive bidding process evaluated by an independent panel of more than 10 representatives from Las Vegas and state agencies. Michelle Erlach, Sierra Nevada corporate director of renewable energy, said the state should consider approving the agreement in a special meeting this month to keep momentum on the project going.

“We’re pushing it through because we’re a business, we’re all about making the economy run and move forward,” Erlach said. “The timing is not driven by politics. Rather it’s driven by financial, logistic and employment concerns to further the state’s policy on solar.”

The company plans on getting informal approval from Gov.-elect Brian Sandoval, who takes office Jan. 3. “Even though a formal approval is not required, we are going to get a preliminary buy-in on the concept ... from the next administration,” Erlach said.

Groth, who was not reappointed as energy director by Sandoval, said Gibbons had little involvement with the selection of the Sierra Nevada partnership.

The agreement would help bring renewable energy to the state, he added. Each agency would be able to negotiate an agreement to buy back the power from the company, he said. Those contracts would have to be approved by an executive branch board and a legislative panel.

He dismissed concerns about the cost, saying agency directors are fighting for every dollar right now, and wouldn’t agree to energy contracts that cost more money.

“A director is sure as hell not going to engage in a decision that will cost taxpayers more money right now,” Groth said.

Cortez Masto has asked her office’s consumer advocate, Eric Witkoski, to establish whether power purchase agreements save the state money. That review was to be completed by Friday.

Tuesday’s meeting of the Board of Examiners, which approves contracts, was the last regularly scheduled meeting for Gibbons, who lost the June primary to Sandoval. Gibbons could, however, call an emergency meeting of the board.

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  1. Did they own the horse ranch where Gibbons fell off the horse?

    I thought the dittoheads did not like solar power? I guess if you can get a buck off it, it is OK.

  2. Chunky says:

    If we can afford it now... the big "IF" we should go for it!

    Sunlight is about the only thing we have in abundance and free here in the state!

    That's what Chunky thinks!

  3. First, there is the obvious angle of a possible corrupt bargain with an insider.

    Perhaps more important is the question: Should we do this deal or something like it with anyone in the near future? Residential customers in Nevada paid an average of about 12 cents per kilowatt-hour for their electricity in August of this year. Because of the abundance of natural gas and coal, the US Energy Department forecast for electricity rates is that they will not go up very much in the next 10 years.

    Solar panels are very expensive to build and place -- and they are not terribly efficient. They will become more efficient and cost less in the future. But right now, the current solar panels -- as apparently proposed for this project -- will produce electricity at somewhere between 25 and 30 cents per kilowatt-hour. That is 2 to 3 times of conventionally-generated electricity.

    Solar would seem not to be economic now for areas that are on the grid. But as a political favor to a friend it could be lucrative for anyone who does not have to subsidize it -- every one of us who uses electricity will being paying that subsidy.

  4. What I did not hear from Michelle Erlach is the projected cost, and projected savings to the residents of Nevada? If we are paying more for solar energy in comparision to the current rate with NV Energy, than something is wrong and most be corrected.

    Why would the State pay more for solar energy? This be a transparent process? Right?

  5. The car, the movie, the TV and the airplane were impractical and expensive when they first came out.

    It is time to take away Gibbon's free medical care.

  6. If the state currently pays 11 cents per KW hour for electricity how is paying 17 or 18 cents per KW hour saving money?

    Maybe that is to simple?

  7. Solar power does not, and will never work. Even if the cost of generating solar power drops below conventional costs, you still need the grid, coal fired plants, and other sources for when it is nighttime or when it is a cloudy day.

    This is just wishful thinking.

  8. @thekash

    Ever hear of storage batteries ?

  9. This is unbelievable, if anyplace should have solar power, it is Nevada. There should be panels on every roof and all the free space in the state. Yes, the cost of the panels is significant and is an initial outlay, but after that, its FREE. We have more sunlight here than anywhere else. The power produced I'm pretty sure is DC power which can be stored, it's converted to AC power for transmission and use. How can it cost more to produce solar power than it is to burn oil or natural gas?
    And if we don't go solar, what about wind power?

  10. "The state CURRENTLY pays 11 cents..." I lived here when we were paying the one of the lowest cost per kilowatt hour in the country, not near the highest.

    Does solar power work? Of course it does. It takes the load off the conventional sources of power at the time when it's needed most, during the day. What a coincidence, that's when the sun is out. We don't have to rely solely on solar power for it to prove it's worth. Or haven't any of the anti-solar loons been here long enough to remember the rolling brown-outs during the summers? Oh wait... that's also when the sun is at it's brightest.

    The question in the article isn't the pros and cons of solar energy, it's a question of Gibbons getting kickbacks from a company he has close ties to.

    I say we should open the bid to other solar contractors on an equal basis.

    Hmmm... will they demand a refund from the Gov?

  11. If we could get all the back scratching out of the pathway towards sustainable green energy PRODUCTION in Nevada, that would be a great start. There are enough barriers, however, to deter even the most enthusiastic of people, be it regular private citizen, or investors with means. Nevada Senator Reid and Congresswomen Berkely and Titus, have laid the path, groundwork, funding, and needed attention of Nevada entering the modern age on sustainable green energy. They have made sure that all Nevadans are aware of their efforts. Is it perfect? No. But it is a fabulous start!

    This state has had the reputation of leisure gaming with Las Vegas and Reno, and the boom and busts of mining, and Federal Government/military projects with the Nevada Test Site, Nellis & Creech AF Bases, Yucca Mountain High Level Waste Repository, Parks & Recreation wilderness areas, and the wild mustangs. Things had been carelessly thrown up to make fast money, also torn down or imploded to do the same. Very little thought and planning took place in the past. Why? "Nevada is a damn desert!" old timers would cry, over and over. Now, we enter a new century, we need to take the time and think about the future, one that addresses our sustainability.

    For the last 20 years, Nevada has experienced growth that was largely irresponsibly guided. Both housing and commercial projects were virtually "rubber stamped" which included favors, bribes, and whatever else is done on the sly. Presently, we are reaping the results. Water is scarce, and now the people in the state are fighting over its availability. Empty buildings and homes litter the landscape, as developers thought it best to overdevelop and take their money and run. The majority of them did just that or have since went broke/money all spent. Few, if any, built green energy production features into their magnificant structures. No one was thinking and no one made them. Are we going to continue that mindless trend Nevada is so very famous for?

    Now is the time to remove any and all barriers, including costs or permitting to homeowners, to make sustainable green energy PRODUCTION a priority! Let's make Nevada energy smart. That would be a great start, since we continue to be the lowest educated in the Union (USA). So far, green energy appears to be something that only the big cats are able to succeed at. Everyday people have NOT been successfully included in Nevada's efforts toward making this state green energy sustainable! That needs to change! The little guy cannot compete in his/her ability to get favors, line political pockets, do the mutual back scratching that truly takes place. Make both solar & wind energy easier for the little guy to have, and watch REAL positive change in Nevada for now & its future!