Public Utilities Commission Report

Energy Choice Initiative Final Report

Public Utilities Commission of Nevada (April 2018)

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Key Findings

  • Nevadans currently enjoy some of the lowest average electricity rates in the country, and Nevada is a leader in solar and renewable energy development, as well as job and business growth.
  • The Energy Choice Initiative is reasonably likely to increase the average monthly electric bills of Nevadans, at least in the short term, i.e., the first 10 years. These cost increases will potentially diminish over the years as Nevada’s new open-market paradigm becomes established, Nevada’s economy and population grows, and the transition costs are paid off.
  • Large commercial customers will likely see more immediate benefits from the Energy Choice Initiative due to the elimination of an alleged residential subsidy and reduced impact fees relating to NRS Chapter 704B.
  • Ambiguous language within the Energy Choice Initiative makes it difficult to discern its full legal meaning and scope, and purported objectives of the measure appear to be in conflict with each other.
  • No state has ever deregulated its energy market or made energy policy by amending its state constitution, which make the implications of the Energy Choice Initiative relatively permanent and unique to Nevada.
  • Plain language of the Energy Choice Initiative removes the authority of the PUCN and, subsequently, the Nevada State Legislature to control the generation component of a bundled electricity rate. This will cause new exposure for Nevada ratepayers to market volatility and profit-driven ratemaking practices. It may also bring theoretical benefits of open market competition to Nevada.
  • The Energy Choice Initiative will likely require in excess of 100 million dollars in new startup cost an, thereafter, over 45 million dollars in annual operation and maintenance costs.
  • NV Energy will likely be forced to divest its generating assets and assign its long-term power purchase contracts to new owners. Nevada ratepayers will remain liable for any financial losses incurred by NV Energy from these stranded costs, which could foreseeably exceed several billion dollars. While these stranded costs will not be new to Nevada ratepayers, they will offset any possible benefits from an open and competitive market created by the Energy Choice Initiative.
  • At least 400 union electrical employees are likely to lose their jobs, and hundreds more may be negatively affected by the Energy Choice Initiative. The Energy Choice Initiative will also likely create new jobs for Nevadans, but what those jobs will be remains speculative and unestablished.
  • Net Energy Metering (NEM)/rooftop solar laws and policies recently enacted through Assembly Bill 405, as well as other energy programs, will likely be negatively affected by the Energy Choice Initiative.
  • The California Independent System Operator (CAISO) appears the most viable option for Nevada to participate in an organized wholesale market. Yet, this option has challenges, due to the need for bi-state legislation and changes to CAISO’s governance structure to ensure Nevada’s interests are represented.
  • It remains an open question as to who will serve as a provider of last resort (POLR) for NV Energy’s former Nevada customers in a retail market. This remains an area of concern given Nevada’s divers geography and population demographics.
  • The Energy Choice Initiative can be implemented by July 1, 2023. But it will require an immediate an unprecedented commitment by Nevadans of financial, legislative, and legal resources.