Power plant proposal would hike burden on Nevada ratepayers

By Paul Bachman, David Tuerck, Ph.D.
  • Tuesday, October 6, 2015
New NV Energy power plant will cost ratepayers $115 million in 2020
Higher power rates from SB123 could eliminate over 2,900 jobs
Legislative mandates are raising your power rates. Find out how much more you'll pay.

Executive Summary

Nevada’s electric monopoly, NV Energy, has asked the state Public Utilities Commission to approve a controversial proposal to build a new 706-megawatt natural gas power plant that could cost up to $1 billion.

Compared to the alternative of purchasing natural gas power from existing power plants, the marginal cost to ratepayers of NV Energy’s plan for a new power plant would be $115 million in 2020 alone.

Building the new power plant would reduce employment by 1,614 jobs, and lower investment in Nevada by $18 million. Electricity rates would increase by 3.2 percent, costing the average consumer each year an additional $31 and the average industrial rate payer $9,970. From 2020-2025, the increased cost to ratepayers will total $604 million.

The push for the new plant is driven by the Nevada Legislature’s 2013 passage of Senate Bill 123, mandating the closing of coal-fired power plants currently providing over 800 megawatts of power, which is to be replaced by electricity from gas-powered and renewable sources.

However, when three casinos, during the 2015 Legislative Session announced their intention to exit the NV Energy monopoly system, as permitted by legislation passed in 2001, the Legislature passed Assembly Bill 498, cutting the amount of power production mandated by SB123.

Yet, even as modified by AB498, SB123 still imposes substantial costs on all consumers. The electric monopoly’s new power plant would still cost ratepayers $206 million in 2020, reduce employment by 2,925 jobs and lower investment in Nevada by $33 million. Rates are projected to increase by 5.8 percent, costing the average consumer an additional $55 a year and the average industrial rate payer $17,906 a year. From 2020-2025, ratepayers will be cost another $1.086 billion.

Even if the PUC rejects NV Energy’s plan for a new power plant, requirements built into AB498 will still cost ratepayers $91 million in 2020. High power prices will reduce employment by 1,311 jobs, and it will lower investment in Nevada by $15 million. Building the new power plan will cause rates to increase by 3.2 percent, which will cost the average consumer $24 a year and the average industrial rate payer $7,936 a year. From 2020-2025, these requirements will cost Nevada consumers $438 million.