The commission says the utility is ignoring potentially advantageous market conditions for purchasing power, in lieu of building its own power plants.
"There are a myriad of lost opportunities that we would come across in the next 10 years that we would forgo," Noble said. "To me it's a solution in search of a problem."
The coal-replacement building plan would "completely mitigate risk for the utility," Wagner said.
Yackira said the utility is only following a decade-old plan that began as the result of the Western Energy Crisis. At the time, Nevada bought a lot of its power from out of state and ended up relying on some unreliable players.
"Nevada was left holding the bag," Yackira said. "We said we need to be more energy independent."
In response, the utility built its own power-generating capacity so that wouldn't happen again. Noble said the cost was about $3.5 billion.
"If we look at electricity prices, they're about flat to where they were to the beginning of 2006 in Southern Nevada," Yackira said. "The strategy has worked."
Bottom line: Cheap natural gas has kept rates fairly flat during the past few years, but rates haven't fallen because ratepayers have been paying more for the construction of power plants. Cheap natural gas in the future could keep rates down if NVision's construction plan becomes law. But it's also true that the plan doesn't consider potentially cheaper power purchase agreements.
Review process may be weakened
The commission says the NVision plan could weaken the commission's Integrated Resource Planning process. This may seem like bureaucratic garble, but UNR graduate and current chairman of the Federal Energy Regulatory Commission Jon Wellinghoff was instrumental in the creation of this well-regarded process.
Much like having a gearhead buddy check a mechanic's price quote for repairing a car, the resource IRP is basically an expert, independent review of the utility's plan for generating reliable energy in the next few years.
"The commission's resource planning statutes are some of the best in the United States as far as resource planning goes," Noble said.
Yackira said the NVision plan strengthens the flexibility of the commission, giving it the ability to review plans with a more diversified menu of regulatory choices.
Here, the commission says it's open to changes, but it's protective of the process.
"I think that the IRP process has proven itself to be able to meet the flexibility and the needs of what is happening out there in the marketplace," Commissioner Alaina Burtenshaw said.
Bottom line: The regulatory process still exists in the bill, but the bill says the commission "shall accept" the utility's plan if it provides an adequate and reliable level of power service to ratepayers, a minimum standard for the utility.
Legislature would be accountable for policy
NVision essentially asks legislators to raise rates on their constituents and guarantee a profit on NVision's mandated power plant construction.
"Legislators need to be aware that they would be legislating rate increases," Wagner said.
She also said that legislators should be aware that they're weighing matters that the commission and its staff would normally review for several months. The Legislature has just 36 days left in the legislative session.
Yackira said the Legislature should set a major state policy of divesting from coal and investing in natural gas and renewable energy.
He compared it to the Legislature's approval of the Renewable Portfolio Standard, another state-mandated energy policy that requires the utility to obtain a certain percentage of its power from renewable sources.
"We think it's important to set policy at the state level," Yackira said.
Bottom line: This is not an either-or situation. As Yackira noted, the Legislature has discretion to change the bill. The bill could be a single page directing the utility to get out of the coal business, or it could be the 24-page measure the utility has proposed, or it could be anything in-between. Regardless, the Legislature would be accountable for the policy.
Different kinds of energy independence at play
NV Energy has sold the bill as a way to ensure "Nevada's energy independence."
Wagner said that selling point "is driving me nuts."
NVision's natural gas regimen is "making us more dependent on fossil fuel and less reliant on our indigenous resources and conservation," she said. "True energy independence would be not sending billions of dollars out of state to purchase natural gas."
Yakira said Nevada could become a natural gas producer, but the energy independence has to do more with independence from energy markets, not fuel markets.
"It's incumbent for us to ensure the reliability of energy without the markets," Yakira said, citing the Western Energy Crisis and its disastrous reliance on energy markets. "We can't count on those markets to produce energy for us, and we've been down that path, and it's failed miserably for us and our customers.
The best way to assure that is to have the Legislature adopt this policy that we want to get rid of coal and replace it with natural gas and renewables. If the Legislature decides not to go down that route, we are still going to press forward with this because we think it's the right thing to do."
Bottom line: The commission and the utility are talking about different kinds of "energy independence."
(c)2013 the Las Vegas Sun (Las Vegas, Nev.)
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