NPRI analysis of NV Energy plan shows ratepayers will pay much more under NVision scheme

  • Wednesday, May 22, 2013

CARSON CITY — NV Energy’s proposed “NVision” plan, currently being considered by legislators in Carson City, will increase the cost of electricity, does not include a cap on rate hikes caused by increases in natural gas prices and forces ratepayers to pay NV Energy for stockpiles of coal it has purchased but no longer wants to use. Those are the findings of a new NPRI analysis of Senate Bill 123, which contains the NVision plan.

The analysis, authored by NPRI deputy policy director Geoffrey Lawrence, is entitled NV Energy plan would impose big, new hidden costs on ratepayers: ‘Fuel switch’ plan resembles a‘bait‐and‐fuel‐switch.’

It details how SB 123 would increase the monopoly earnings of NV Energy, while forcing ratepayers to shoulder the risk of higher natural gas prices.

“NV Energy's NVision plan would increase the cost of electricity and reduce regulatory oversight by the Nevada Public Utilities Commission while incentivizing waste and inefficiency,” said Lawrence. “There is no cap on rate hikes caused by an increase in natural gas prices, which are historically volatile. These quarterly ‘fuel-cost adjustments’ would not be part of general rate hearings.”

Lawrence noted that the plan would be a financial boon for NV Energy, which, because of government regulations guaranteeing a return on equity of 10.5 percent, has a perverse financial incentive. NV Energy is financially rewarded if it can get state lawmakers to impose more costly and inefficient production methods, such as the NVision scheme.

“Ratepayers would have to reimburse NV Energy for constructing new power plants and also pay NV Energy for the capital costs of coal-fired power plants it's no longer using and even for stockpiles of coal it has purchased but no longer wants to use,” stated Lawrence.

Lawrence then described how a similar plan in Colorado is already raising electricity prices and imposing severe economic consequences.

Economic modeling of a similar plan in Colorado found that Colorado ratepayers will now pay between 11 to 50 percent more for power and that this would result in the net loss of between 280,000 and 1,180,000 jobs,” said Lawrence.

“As currently envisioned, this plan would be a government-mandated wealth transfer from Nevada’s ratepayers — including poor families and struggling businesses — to Nevada’s government-mandated energy monopoly.”

Lawrence concluded that open competition on the retail electricity market, modeled after Texas, is needed to lower Nevada’s regionally high electricity prices.

The full analysis — NV Energy plan would impose big, new hidden costs on ratepayers: ‘Fuel switch’ plan resembles a ‘bait‐and‐fuel‐switch’ — is available at