Skeptical lawmakers move NV Energy bill forward

By Andrew Doughman

Friday, April 12, 2013 | 4:58 p.m.

NV Energy’s big plan to say goodbye to coal and invest in renewable energy and natural gas got a rough reception at a Senate hearing today.

The Senate Commerce, Labor and Energy Committee ultimately voted with reservations to adopt NV Energy’s plan, but the vote was more a lateral move than a step forward. The vote just bumped the bill over to another Senate committee for further consideration.

Introduced just last week, the plan is evolving into one of the more contentious issues legislators are considering. The plan has the potential to affect what every Nevadan pays for energy, and the bill has a diverse and sometimes conflicting following of energy providers, big businesses, environmental groups, NV Energy shareholders, state regulators, consumer advocates, and residential ratepayers.

Sen. Kelvin Atkinson said the committee was “not totally satisfied” with changes the utility made to the original proposal to address lawmaker concerns.

Legislators critiqued the amendment to the proposal, titled NVision, wondering aloud whether they’d be ceding too much regulatory control to the utility and whether their constituents would see their power bills increase as a direct result of the bill.

Like the original NV Energy plan, the new plan would still increase rates by about 3.84 percent over the next 20 years.

“If your bill was $100 today, if we did nothing, the current resource plan in place would mean your bill would go to $134,” said Pete Ernaut, lobbyist for NV Energy, to a Senate committee. “This plan would make your bill go up to $137.”

He said, though, that the estimate relies on the current price of coal, which could dramatically increase due to stricter federal regulations during the next 20 years.

“This [NVision] actually becomes a lower cost alternative than hanging in with coal only to find out that not only the environmental cost of coal but the actual cost of coal is an enormous burden far and above what we have in this plan,” Ernaut said.

But some legislators questioned why they were even being asked to undertake that sort of intellectual exercise.

“I have some serious reservations with putting the burden on us to make business decisions for a publicly traded company,” said Sen. Justin Jones, D-Las Vegas, who noted that the Public Utilities Commission of Nevada would normally make the decisions that the utility is asking the Legislature to make. “We’re shackling the PUC in their ability to do what makes the most sense for the utility and ratepayers.”

The Public Utilities Commission testified that the NVision plan would put the utility under an “entirely new standard” outside of the commission.

The utility would allow the commission to consider and evaluate the utility’s plan, but the bill would have the commission consider whether “the filing is consistent with the statute, so that is largely self-fulfilling,” said Don Lomoljo with the PUC.

“This is not a normal resource planning standard,” he said.

The bill still mandates construction or acquisition and ownership of natural gas and renewables on a set schedule.

The plan allows the utility to replace the coal power it owns with other types of power that it would also own, a business decision that guarantees shareholders that the utility isn’t making a “foolish transaction” by shutting down a company-owned coal plant with no replacement, Ernaut said.

The company would make a profit off the new construction, but the new plan contains “rate mitigation” that would apply a 5 percent cap on annual rate increases directly related to the plan.

The provision, though, would allow the utility to recoup the other costs beyond the 5 percent cap at a later date. NV Energy would also get to collect interest on those payments, which worried Dan Jacobsen, a consumer advocate with the Attorney General’s Bureau of Consumer Affairs.

“That means the burden just grows over time,” he said.

The new plan contains a few major changes to energy policy as well.

It “significantly scales down” the amount of natural gas generation the company’s called for in its original plan, Ernaut said.

Instead of 2,000 megawatts of natural gas, the new proposal would call for 700-800 megawatts of gas-fired generation: 500-550 megawatts by 2017 and 200-250 megawatts by 2019.

(For reference, the 500 megawatt Harry Allen combined-cycle gas plant cost about $700 million in 2011.)

The plan would still retire 800 megawatts of coal-fired generation by 2019, including closing three-quarters of Reid Gardner coal plant in Clark County.

“We made this more of a one-to-one replacement plan,” Ernaut said.

That plant will likely stay closed, according to comments from NV Energy employees who told Sen. James Settelmeyer, R-Minden, that high costs would likely stop the utility company from retrofitting Reid Gardner from coal to natural gas.

Ernaut said the company had worked with the energy community, large customers, regulators, representatives from Gov. Brian Sandoval’s office, and environmental groups to “come to some idea of a path to a better bill” during the past 10 days.

Now the bill will likely have another hearing in the Senate Finance committee.