When it comes to power, Patricia Mulroy and her friends on the Clark County Commission can’t seem to get enough. Not satisfied with controlling Southern Nevada’s water resources, they’re now seeking to take over Las Vegas Valley electricity, too.
Over the past 13 years, Mulroy, an unelected bureaucrat, has amassed more power than most Clark County elected officials. Not only is she general manager of the Las Vegas Valley Water District, the Valley’s biggest water provider. She also runs the Southern Nevada Water Authority (SNWA), which controls water delivery to all of Southern Nevada. Then there’s the fact that SNWA—because of Mulroy’s efforts—today appoints three of the seven members of the Colorado River Commission. The result is outsized power over the state agency that negotiates water rights issues with other states and the federal government and also provides electric power to certain large wholesale and industrial customers.
For their part, Mulroy’s allies on the county commission have loaded the November ballot with an advisory question they hope will drum up public support for their big power grab. Supposedly this ballot proposition lets Southern Nevada voters voice an opinion on whether electricity should be delivered by a public utility or a private company. But the ballot proposition comes at the same time as the water authority’s highly publicized bid for Nevada Power Company. So it’s obvious SNWA and commissioners would hail a majority vote for the ballot question as public support for their proposed buyout.
How would such a takeover enhance the power of these County Commissioners? For starters, the seven—including the more ethically challenged among them—comprise the entire board of the Las Vegas Valley Water District. Three are on the seven-member board of the Southern Nevada Water Authority. And both a commissioner and a former commissioner sit on the board of the Colorado River Commission. The proposed $3.2 billion buyout of Nevada Power would thus give Mulroy and the Clark County Commissioners a virtual hammerlock on the delivery of two of the services most critically basic to life in the Las Vegas Valley.
To justify SNWA’s proposed takeover, the authority has retained Wall Street investment banking firm Morgan Stanley and other consultants. In exchange for a million dollars in fees, they are to construct an economic rationale for the authority’s multi-billion dollar bid.
Amazingly, however, with this one move SNWA has cast doubt on its own credibility as a prospective manager of Southern Nevada’s power needs. That’s because of Morgan Stanley’s role in the infamous California energy crisis. The firm’s power-marketing subsidiary, Morgan Stanley Capital Group, is today the target of numerous complaints, investigations, and legal actions referring to its behavior during that period.
One politically potent charge against Morgan is that, during the height of the California energy crisis, it fought to keep state electricity prices at astronomic levels. For example, when the state agency operating California’s electric grid attempted to mandate a new and lower maximum wholesale price (a mere $500 per megawatt-hour, rather than $750), Morgan Stanley complained to federal regulators.
Set aside, for the moment, the fact that California lawmakers created their state’s crisis by prohibiting utilities from signing long-term energy contracts and forcing all power purchases to be made a week in advance or on a crazily rigged and highly expensive spot market.
Instead, note that SNWA’s selection of Morgan Stanley immediately revealed that the authority didn’t even know of the charges against Morgan, didn’t grasp their significance—or didn’t care.
Clearly, if SNWA didn’t know about the charges against Morgan, the water authority had not done its due diligence before spending a million taxpayer dollars.
On the other hand, if SNWA did know about the charges, its responsibility was to make a significant judgment: Was Morgan, in the circumstances, blameless or blameworthy?
If the former, Southern Nevada electric ratepayers will not be reassured. It would mean SNWA endorses Morgan’s pricing behavior during the California meltdown—despite the fantasy of low electricity prices that SNWA has been presenting to all and sundry.
Even less reassuring, however, would be the alternative: That SNWA & Co. believe Morgan did indeed game California’s power system, but that they simply do not care.
Rather, in pursuit of ever more power, they are quite willing to hire a firm that had been instrumental in producing the very energy crisis that—along with Nevada politicians— victimized Silver State ratepayers while helping force Nevada Power itself into the financial ditch.
W. W. Anderson, a retired Southern California journalist now living in Las Vegas, is a policy fellow of the Nevada Policy Research Institute.