State laws encourage green energy, discourage efficiency

Kyle Gillis

Nevada residents, encouraged by politicians to “go green” to save energy, are being hit with higher rates for doing so. And more rate increases are in the pipeline.

Beginning July 1, courtesy of state renewable-energy laws and the state Public Utilities Commission, ratepayers will pay an additional 3.4 percent to subsidize the state energy monopoly, NV Energy.

According to the PUC’s approval order, the rate increase reflects NRS 704.785, passed during the 2009 Legislature as SB358. That law gives electric utilities the “opportunity to recover lost revenues associated with energy efficiency and conservation (“EE and C”) programs” and further allows the PUC to “implement the lost revenue recovery mechanism.”

A “recovery mechanism” is government-speak for rate increase. The PUC approved two new rates that will appear on electricity users’ bills: the energy efficiency program rate (EEPR) and the energy implementation rate (EEIR).

NV Energy has reported that it lost over $100 million from energy-efficiency program investments and consumer energy conservation. Both sources of NV Energy’s revenue loss reflect government-mandated programs designed to interfere with the natural economic forces of supply and demand in order to accomplish political goals.

Nevada’s most costly energy initiatives are the state’s mandatory and highly “aggressive” Renewable Portfolio Standards (RPS). First established in 1997, the RPS requires electric utilities to obtain certain percentages of their energy from renewable power sources. RPS standards began at 1 percent and expand every year. SB395, passed by lawmakers in the 2009 Legislature, established the “25 by 25” mandate, requiring that 25 percent of the monopoly utility’s energy production come from renewable power by 2025.

Judy Stokey, NV Energy’s director of government affairs, says the company supports the RPS and will continue to comply with them, but believes “market-based processes” are the best way to get the “lowest and best prices for customers.”

NV Energy has met the RPS standard only once in 13 years but has spent over $100 million on renewable energy programs.

No legislation was introduced during the 2011 Legislature to reform the RPS, notwithstanding the state’s economic depression and the destructive impact on ratepayers of existing energy laws. Instead, the current rate increases were assured by AB150, which endorsed SB358’s “recovery mechanisms.”

Assembly Democrats David Bobzien, Kelvin Atkinson and John Oceguera sponsored the bill, and it received Senate sponsorship from Majority Leader Steven Horsford and Commerce, Labor and Energy Committee Chair Michael Schneider — both of them Democrats. However, AB150 unanimously passed both chambers and Gov. Brian Sandoval, a Republican, signed the bill May 13.

Thus, in addition to agreeing to $620 million in tax increases in the state budget, lawmakers and the governor also approved legislation sanctioning an average $5-per-month increase in ratepayers’ monthly power bills.

Senate Energy Chair Schneider introduced another bill which would have increased electricity rates, SB184. Originally, the bill would have established a “feed-in-tariff,” in which larger utility companies would have been required to pay “tariffs,” or subsidies, to smaller green-energy providers feeding the power grids. Essentially, the tariff would have taxed existing utility companies — and thus rate-payers — to further subsidize politically connected green-energy companies for which market demand doesn’t exist.

“This bill [SB184] legislatively picks a winning technology,” said NV Energy spokesman Stokey during a March 11 hearing before Schneider’s committee. “NV Energy supports strategies which the prices paid for renewables are driven by a market-based process in order to obtain the best value for customers.”

Schneider eventually dropped the tariff mandate from the bill, and replaced it with a mandate that the PUC study the scheme for possible passage in the 2013 Legislature. While the watered-down SB184 passed the Senate, it was stuck in the Assembly Commerce and Labor Committee before dying without a vote in the full Assembly. Schneider blamed that on freshmen assembly members, telling the Las Vegas Review-Journal, “I’m not sure [Atkinson’s] committee understands it all that well, because there are so many novices.”

Schneider, a member of U.S. Senate Majority Leader Harry Reid’s Blue Ribbon Panel on Energy, didn’t stop with SB184. He also introduced SB281, which would require the PUC to establish an “Electric Vehicle Demonstration Program” that could give $3,000-per-vehicle state subsidies to registrants of 1,500 electric vehicles in Nevada by 2016. Section 14 of the bill — authorizing “an electric utility to recover its costs incurred in carrying out the Demonstration Program” — would allow NV Energy to raise rates further, to “recover” the resulting $4.5 million in costs.

SB281 passed the Senate on a near party-line vote in late April but ultimately died in Atkinson’s “novice” Assembly committee.

One of Schneider’s “demonstration programs” which did pass and was enrolled by the governor was SB182, creating a Thermal Solar Demonstration Program. It requires at least 3,000 solar thermal installations throughout the state by 2019.

Schneider wasn’t the only legislator introducing “demonstration programs.” Assemblyman Steven Brooks, D-Las Vegas, introduced AB442, again requiring the PUC to “achieve the Legislature’s goal” of 10 megawatts-worth of community solar gardens in Nevada by 2021.

Brooks, a freshman on the Assembly Commerce and Labor Committee, also introduced AB172, which adds two employees each to the state Office of Energy and the Department of Health and Human Services to “manage and coordinate the use of any grants or other money to promote the use of renewable energy in this State” as well as “promote the use of measures which conserve or reduce the demand for energy or which result in more efficient use of energy.”

Brooks’ bill, thus, would promote the same energy-conservation measures that are currently resulting in rate increases. According to fiscal notes, the bill would add $700,000 to the government payroll for salaries in the expanded departments.

Both bills never reached a committee vote, but they could be reintroduced for the 2013 session.

According to a PUC spokesman, either NV Energy or PUC commissioners could file a repeal of the rate increase order but said it is “unlikely.”