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October 22, 2014

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Legislature 2013:

For some stakeholders, a cautious embrace of NV Energy’s plan to ditch coal

Image

Leila Navidi

Reid Gardner Station, a coal fired power plant in Moapa, is shown on Friday, Dec. 7, 2007.

Nevada’s utility company delivered Wednesday what appears to be a gift to the community.

NV Energy told state lawmakers at a hearing at the Legislature that it wants to divest from the coal business, reduce carbon emissions, invest in renewable energy and natural gas, and create thousands of jobs in Nevada.

It even has a nice bow on top: The company says it can accomplish all this at minimal cost to ratepayers.

But a broad array of stakeholders who endorsed the look of the gift reserved the right to inspect its contents before voicing more full-throated support.

“We applaud the intent of what we think is trying to happen here,” MGM Resorts lobbyist Josh Griffin said in testimony that was representative of the guarded support others gave during the four- hour hearing. “There are concerns about the details.”

Even with caveats, the utility’s plan, which it calls “NVision,” received initial support from a broad coalition of solar companies, labor unions, environmental groups and even the Moapa Band of Paiutes, which is suing NV Energy over its Reid Gardner coal plant in Clark County.

Support for the plan coalesced around the utility’s emphasis on its move away from coal. But there is much more to the proposed legislation.

Following the Sun’s first reporting of the plan late Tuesday, a variety of national groups applauded NV Energy’s step to move away from coal.

The utility said it makes sense to divest from coal now.

They face a combination of expected U.S. Environmental Protection Agency regulations, pending litigation associated with the Reid Gardner coal plant, and additional long-term maintenance and mitigation costs, said Pete Ernaut, lobbyist for NV Energy .

Critics of the plan lauded the idea  but asked what NV Energy hopes to gain by giving up coal — questioning the details that lie beneath the shiny wrapping. The Nevada Bureau of Consumer Affairs already has predicted that the rate increases from the proposal will likely be much higher than the utility estimates.

"Unfortunately, NV Energy has bundled the good with the bad,” said Lynn Davis, senior program manager for the National Parks Conservation Association, who lauded the idea of shutting down coal-fired power in a media statement. “NV Energy appears to have attached strings to this announcement — acceptance of their plans and a ratepayer increase without oversight by Nevada's Public Utility Commission (PUC).”

At the hearing, legislators focused the brunt of their questioning on the ratepayer impact and the unclear nature of how the proposal would change regulation of the utility.

Sen. Mark Hutchison, R-Las Vegas, led the way, asking repeatedly about the added burden for ratepayers and the extent to which the bill would allow the utility to remove oversight from the Public Utilities Commission.

(As a regulated monopoly that provides most of the energy to Nevada customers, the commission oversees the utility via a three-member board the governor appoints.)

“Does it seem odd to you that the industry that you regulate is bringing a document forward telling you how to regulate them?” Hutchison asked a staff representative of the commission.

The utility’s proposal would call for accelerated closure of the state’s two coal plants and cancellation of a contract with a coal plant in Arizona. NV Energy would replace the coal power with 2,000 megawatts of natural gas and 600 megawatts of solar, wind or geothermal power during the next 10 years.

The company would be able to unilaterally approve rate increases for these additions; the Public Utilities Commission would get a chance to review and possibly revoke those increases every three years.

The company’s proposed legislation would also bind the PUC to the natural gas and renewable energy plan when it considers the company’s resource plan for the next three years. It would no longer be able to flatly reject the utility’s plan.

But NV Energy’s spokesman argues that the commission would have the flexibility to modify it, which he said is tantamount to rejection in the sense that the commission could propose big changes — as long as they stick with the Legislature’s statute that tells them that they must retire coal and add renewable energy and natural gas.

“This legislation, however, provides the commission additional power,” said NV Energy spokesman Rob Stillwell. “The commission has the power to modify the plan — or, more simply, propose an alteration to improve the plan — instead of reject the plan and send the company back to the drawing board.”

The PUC has not taken an official position on the bill, although Hutchison was concerned that the bill would force the commission to increase rates based on the company’s proposed construction and development schedules rather than making considerations for ratepayers.

A representative from the Nevada Bureau of Consumer Affairs said the rigid schedule would force legislators to lock in an energy plan for the next 10 years.

“I hope you have an appreciation for the difficult long-range decision you’re being asked to make in this bill,” Dan Jacobsen of the consumer affairs office said. “This bill says please mandate that the right thing to do in 2025 is to build a 500-megawatt natural gas power plant.”

Legislators, lobbyists and others had little time to review the lengthy proposal, which it presented to the committee just nine days before it is required to either pass or reject the bill.

Stacey Crowley, director of the Nevada State Office of Energy, noted in testimony to legislators that nobody has had time to review how NV Energy calculated its ratepayer impacts.

Several legislators also noted that this amendment got dumped on them at the last minute.

In fact, one lobbyist began testifying to the original bill, which had little resemblance to NV Energy’s plan.

Ernaut said the company has been formulating its plan since last summer. Its representatives shipped the tentative plan around to the governor, the Public Utilities Commission, the Nevada Bureau of Consumer Protection and to a select group of legislators, he said.

But the Legislature’s legal division just finished drafting the language yesterday, he said.

Joyce Hazard, who spoke as a resident of Las Vegas, said that most lobbyists in support of the bill have something to gain and she asked what ratepayers get out of the proposal other than higher rates.

The Legislature took no action on the amendment after the hearing.

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