The Energy Choice Initiative — Question 3 on the November ballot — would amend the Nevada Constitution to require lawmakers by July 1, 2023, to “establish an open, competitive retail electric market, to ensure that protections are established that entitle customers to safe, reliable, and competitively priced electricity …”
This would include provisions to reduce costs to customers, ensure reliable service and prevent unfair practices. It would not require competitive transmission and distribution systems.
The initiative passed in 2016 with 72 percent voting in favor, but, since it amends the Constitution, voters must again approve it this year.
It had virtually no opposition in 2016 but now NV Energy, the monopoly power company that serves 90 percent of Nevada, has pledged to join with opponents in spending $30 million to defeat Question 3. Under the monopoly system, NV Energy is assured a 10 percent rate of return on investments. Profits without risk.
The ballot measure is being pushed by several large power users — chiefly Las Vegas casinos and large mining and data companies.
The opponents of Question 3 make the spurious claim: “In fact, in the 14 states that deregulated electricity, average residential electricity rates are 30% higher than ours in Nevada.”
That is entirely due to factors such as fuel costs that have nothing to do with what a change to a free market system could provide. The better comparison is to look at how electricity prices have changed over the years since competition was introduced.
According to a 2017 analysis by the Retail Energy Supply Association, the average electricity price in those 14 competitive states fell 8 percent from 2008 to 2016, while the price of power in the monopoly states rose nearly 15 percent.
NV Energy also claims passage of Question 3 would require it to sell off its generating facilities and purchase power contracts at a loss that would have to be covered by ratepayers, but nothing in the language of the amendment requires this. In fact, lawmakers could require NV Energy for a period of time to be the provider of last resort.
NV Energy estimated that it would lose $7 billion by selling assets. The Public Utilities Commission of Nevada estimated those stranded costs could cause electricity rates to rise $24.91 a month in Southern Nevada and $6.52 in Northern Nevada for residential customers.
But a report by the Garrett Group presented to the Governor’s Committee on Energy Choice on behalf of the initiative backers said such a sell-off should be profitable, and, when coupled with the recent tax law changes, should cause power bills to drop by $11.16 a month.
Nevada and many other states were well on the way to breaking up their electricity generation monopolies 17 years ago until the Enron market manipulation debacle led to blackouts and price spikes that scared lawmakers into backing off, even though the free market was not the problem. The problem was collusion and manipulation.
According to a Wall Street Journal article at the time, Enron charged California’s Independent System Operator for relieving power congestion without actually doing so. The company also avoided in-state price caps by moving power out of state and then reselling it to California — fraud. Enron violated the rules.
Free markets tend to reduce cost and encourage innovation.
For example, since Pennsylvania introduced a competitive electricity market residential and commercial customers in Philadelphia and Pittsburgh are paying 40 percent to 56 percent less for power in inflation-adjusted dollars than they did in 1996 and residential customers saved $818 million in 2016.
Let the free market system do what it does best, vote for Question 3. —TM
In Texas deregulated residential customers paid 27 billion more than traditionally regulated customers. That’s a fact. There is a reason why the years 2008 to 2016 are used in the reference above and its due to the fact that natural gas prices dropped during the same time period. The analysis only looks at one aspect of the equation. There’s a Harvard study that looked at 20 years of data and concluded there was very little benefit to Energy choice. They also concluded that there was less innovation in deregulated markets to due short term investments and a lack of long term returns on investments. Typically markets do lower cost, but this not a true open market. Pennsylvania also had a polar vortex affect them in 2014 and some residential bills were $4,000.00 for one month thanks to variable rates. We are asking the legislature to create a market and make things better for us. The PUCN and local board of trustees have done a great job. Nevada has the lowest price increase for energy prices in the country over the last 16 years. I will be voting NO on 3 and I urge all of you who read this to do the same thing.
This is an issue that should never have been brought forward as a constitutional amendment. I urge all Nevadans to vote NO on question 3. Anyone can find anecdotal evidence to support a particular position – as presented here. However, more broadly, in the states where this has been adopted, rates for residential and commercial customers have gone up after requiring a “competitive” market for electricity. Making this a constitutional amendment is a very bad idea. Why would conservatives vote against opening up the market for electricity to competition? Simply because this amendment will require our state legislators to determine how the competitive landscape will defined and our legislature is looking/acting more like California all the time.
Also, please vote NO on Question 6. While using “renewable” energy sources is generally a worthwhile goal, requiring 50% of our power to be “renewable” by a stated deadline is not the right approach. These energy sources must become competitive without subsidy. People will argue the point, but there is no (none, nada, zilch) renewable (as currently defined) energy that is not subsidized by the federal and/or state and/or local governments. Wind and solar are not “free” as some people like to think. Tremendous capital investments are required to build the vast solar arrays and windmill farms that we see dotting the landscape. The collection and transmission lines are likewise costly. They are all subsidized, and the $ for these contracts are going to a very few companies and individuals. If you don’t like corporate welfare, you should certainly not favor wind or solar power development as it exists today. Hydroelectric power is truly renewable, but has lost favor in the environmental community, as we all chase the unicorns of wind and solar.
TM – I usually agree with your position but not this one. With an “open” market which the government will design and control means even more government intervention and bigger government. This was put up by big energy users so they can leave their energy supplier and buy on the wholesale market and maybe get lower prices. Who do you think will get stuck with the higher cost, the residential customer. Almost all of rural Nevada is severed by co-ops or not for profit districts that are locally controlled and operated for the benefit of their customer, not of profit. Let them do their job and serve their people.
Also Prop. 6 will hurt the little guy by requiring power companies to by high price power instead of the best price power. The environmentalists don’t not care what it cost or who it hurts. Supplying 50% of power from renewables will require out of state purchases and since renewables are not available 24/7 maybe batteries, who pays, us.