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September 18, 2014

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Many benefits of energy efficiency

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NV Energy has demonstrated that it can help its customers cut energy waste. NV Energy spent $267 million on energy efficiency programs during 2007-12 — programs that have enabled households and businesses to lower their electricity use by 1.9 billion kilowatt-hours per year. This amount of savings is equivalent to the electricity use of 34,000 typical Nevada households.

More significant, NV Energy estimates that its energy efficiency programs over the past five years will save households nearly $500 million net (i.e., accounting for the cost of the efficiency measures and the utility’s programs, as well as utility bill savings). This net savings is especially important given the tough economic times Nevada is facing. Moreover, helping its customers save energy is the least cost “resource” available to NV Energy — less costly than building natural gas-fired power plants by a wide margin. It also is the cleanest and least risky energy resource in the state.

So given the attractiveness of helping customers save energy, you would think that energy efficiency would play a prominent role in NV Energy’s NVision blueprint for future investment. Unfortunately, that is not the case. In fact, helping its customers save energy is nowhere to be found in the utility’s plan — a plan that calls for retiring older coal-fired power plants and replacing this capacity with costly new power plants — ignoring long-established rules in Nevada for making utility investment decisions based on the lowest cost to customers.

This glaring omission can and should be corrected by the Legislature. If the Legislature chooses to establish its own plan for Nevada’s energy future rather than relying on the expertise of the Public Utility Commission, it should direct NV Energy to meet strong yet achievable Energy Efficiency Standards. This is especially important if energy efficiency credits are phased out of Nevada’s current Renewable Energy Portfolio Standard, as is being considered by the Legislature. In addition, the utility should be directed to maximize adoption of cost-effective energy efficiency resources before it receives approval to invest in more costly supply-side resources.

Legislation also should support energy efficiency by ensuring that NV Energy is not harmed financially and is able to make a reasonable profit when it helps its customers save energy. The controversial “lost revenues” provision now in effect should be replaced with a policy known as decoupling. Decoupling directs the utility to collect the level of revenue approved by the Public Utilities Commission, no more or no less, independent of the amount of electricity it sells. Lost revenue, which is opposed by the state’s consumer advocate and the staff of the commission, allows the utility to charge customers for energy saved through its energy efficiency programs.

Adopting these policies would provide enormous benefits. They would facilitate retiring the older coal plants while holding down the need for costly investments in new power plants, thereby saving households and businesses hundreds of millions of dollars. They would create well-paying jobs through sales and installation of energy efficiency measures and would keep more money in local economies. And they would save water by reducing the operation of power plant cooling systems, with potential savings of around 3 billion gallons through 2020.

Nevada needs a balanced energy strategy that combines saving energy and new energy supplies.

By adding these practical energy efficiency measures to utility legislation, Nevada’s policymakers can serve the interests of households, businesses, the environment and NV Energy.

Fred Schmidt, a partner at Holland & Hart, was a former member of the Nevada Public Utility Commission and was Nevada’s consumer advocate from 1988-2000.

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  1. The cost of getting there--energy efficiency--is huge. Conservationists use to put forth the argument that the earth has but a limited supply of conventional energy sources like oil. When that argument failed, after the invention of fracking technology and discovery of natural gas reserves proved them wrong, they [the conservationists revised it [their mantra] to the need for protection of the environment. I still ask the same question as before: At what cost?

    Carmine D