Face the State: Ballot Question 3 - KTVN Channel 2 - Reno Tahoe Sparks News, Weather, Video

Face the State: Ballot Question 3

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This week on Face the State, Arianna Bennett interviewed Lucas Foletta, Nevadans for Affordable Clean Energy Choices in favor and Danny Thompson, Nevada AFL-CIO in opposition of ballot Question 3.  Read the full transcript below or watch the interview in the video player.


Arianna Bennett: Welcome to Face the State, I'm Arianna Bennett. Thank you for being with us. Well there are four statewide initiatives on the November ballot and we are taking a close look at each of them. This week we'll focus on Question 3: The Energy Choice Initiative.

Question 3 asks "shall article one of the Nevada constitution be amended to require the legislature to provide by law for the establishment of an open, competitive retail electric energy market that prohibits the granting of monopolies and exclusive franchises for the generation of electricity.

Here's a little background: In Nevada residents only have one option for purchasing electricity. It's called an energy monopoly. Now the energy monopoly was the gold standard for power utilities when electricity began to proliferate across the country. Originally it helped keep costs down by investing in just one set of electrical infrastructure and then spreading the cost over a large number of users. In Nevada the Public Utilities Commission is charged with regulating NV Energy, ideally insuring fair prices on both sides.

Recently there's been a push across the country to de-regulate giving energy customers more options for their power supply. That brings us here to Nevada where voters can decide on that issue in November. Question 3 if passed would require the Nevada legislature to add a provision in the state constitution allowing for an open energy market by July of 2023. It would have to pass this November and pass again in the next election to be made law.

So coming up on Face the State I will sit down with a group working to pass this bill to find out why they think this is necessary for Nevada and I'll hear from opponents on why they're trying to stop it. Stay with us.


 Arianna Bennett: Welcome to Face the State, now we begin our discussion of Question 3 with the group responsible for getting it on the ballot to begin with. Now Lucas Foletta with Nevadans for Affordable Clean Energy Choices is here now to talk to us about that. Lucas thank you for coming on the show.

Lucas Foletta: Sure thank you for having me.

Okay so you were one of the people responsible for writing this measure. Why do you and why does your group think this is necessary for Nevada?

We think it's necessary for Nevada to advance three main objectives. One we think it's necessary to generate more jobs in the energy sector. We think it's necessary to lower electricity prices for everyone residential customers and commercial customers alike. And we think it's necessary to generate more renewable energy in Nevada's energy system. We think those are three objectives that are really not possible in the current in the current system that we have which is dominated obviously by one utility.

Now right now Nevada's energy prices are middling across the country, they're actually lower than the national average so why is it that necessarily you think prices need to go down or should go down?

Well currently today our residential prices are-are relatively low. Our commercial prices are high in particular in the West. And so we think that in one respect the commercial prices should be lower but it's also true that prices change all the time. Our prices haven't always been low on the residential side and they could - we were are trying to establish a system that ensures that over time we have the best chance at lower prices across the board. If you look at the other states that have opened their electricity markets, and there's fourteen other states that have done it, you see generally speaking that open electricity markets help constrain cost increases in electricity that happen overtime as a result of inflation. So from 1997 to 2014 for example in open energy- open market states electricity prices rose at about 40%. In the traditional monopoly states they rose at over 60%. Over that same period of time open market states were in the lower half of -of the price increases across the country. 9 of those open market states was in the lower third and 5 of those open market states were in the lower 6 of-of all the states that had price increases. And so we think that that evidence is that over time the open market is the presents the best chance to keep prices low. So whether they're low today in any one particular rate class really isn't the issue. The point is over the next 20, 30, 40, 50 years what system gives us the best chance to have lower prices.

Okay, so if you can paint for me a picture of what this would look like should this pass now and then again in the next election. What would our energy market look like here in Nevada?

Our energy market would look like the markets that we have for almost everything else. So for your average residential customer would be allowed to buy electricity from any number of retail electricity providers. Those providers would be authorized by the Public Utilities Commission you know regulated in a sense, authorized to enter into the market. They would present customers with different options. So you could have options for electricity service that were a particular length so you could have a short term contract or a longer term contract and the pricing would probably fluctuate depending on the term of the contract that you want. You would have the option to buy more renewable energy or to integrate more renewable energy into the resource mix that's serving your home at any particular time and the price would reflect that too. And so really you would have multiple options just like you have when you go out and you want to buy a car or sporting goods or anything else. It sounds like it would be complicated for a residential customer to sort of weigh the costs and benefits of choosing amongst a different options that you would have but in the other states that have done this we have seen that they've been very successful in attracting a lot of interest in the market from residential customers and commercial customers, but in particular residential customers. These states have invested a lot of time and money in educating the public as to how to evaluate different electricity options what the components are of the rates and how you should compare the two. They've not only put time and money into educating people and explaining that but they've also stood up websites that help people compare you know the offer given to you buy Company A versus the option given to you by Company B. And so it really has been successful in these places in terms of recruiting a lot of interest in the market itself.

Now part of the issue with the market though when we're talking about something that's a basic necessity, we're not talking about something like a car which isn't a basic necessity by the same sense, is that if supply drops, if someone tinkers with supply prices go up. How do you ensure that that doesn't happen in this case leaving people having to pay exorbitant amounts for their electricity?

Well we do it much the same way we do now and you'd-you'd enter into a contract for electric service. And so it's not as if your price the price of the electricity that you're buying would change from day to day. It may change from day to day for the person producing the electricity but you would presumably have the option to enter into a contract that's set a rate for the-for the over the term of the of the contract that you enter into. And so if there are fluctuations in the market then that will filter it's way through the system over time but that's true today. I mean if you if-if-if Nevada contracts in size and we have a number of power plants that say that have been built to accommodate a larger population than we have, and that has happened in the past obviously we saw a lot of people leave the state in the last ten years through the great recession, then everyone is stuck paying for those power plants whether they're needed or not. And that's one of the fundamental flaws for the system that we have now which is in a monopoly setting the rate payers are required to pay for the utilities costs of-of building all those assets and then to pay them a rate of return which is essentially a profit based you know on those assets themselves whether we need them or not. In an open market the risk of investing in those generation facilities is transferred to the companies that are building them. And so if we end up not needing a facility because the state drops in size or because it becomes too expensive and that starts to become reflected in the price then the developer of the facility ends up shouldering the burden of that investment.

Basically what I'm trying to nail down I guess is for a consumer for a user someone who's concerned about this thinking well you know what if there are no favorable contracts when I'm shopping for ser-for someone to provide my electricity what if they're all high because the price gets driven up for whatever reason. Is there something to limit that to guarantee is there going to be a cap to make sure they can't rise too high?

Well whether there's going to be a cap is an implementation question. So the-the ballot question itself establishes the right the constitutional right to purchase electricity from an open market. The legislature has until 2023 to determine exactly what that means, what the market looks like, what restrictions on entering the market will be, and what restrictions if any on price will be. I’m sure that that will be an issue that's discussed. I would say that over the long term we don't see that as a likely possibility because for the reasons I pointed out before which is that open markets are evidence to control price better than traditional monopoly markets. So it really does not appear to be substantial likelihood in our opinion.

Okay what I'm curious about is how will this affect the development of clean energy, renewable energy in Nevada? What exactly happens to make that work by deregulating? Why does deregulating make that happen?

Opening the market advances the investment in renewable energy in some really important ways. Right now if your company let's say you're a commercial entity in Nevada and you want to go 100% green, and there are a number of companies that want to do this, Apple and Switch are both northern Nevada companies that have entered into contracts with NV Energy to be provided 100% renewable energy. If you want to do that today you can do it. NV Energy will go out and procure that energy for you from a project in Nevada and they'll sell it to you. But on top of paying the price of the electricity itself, that renewable energy, you're also responsible for paying the underlying system costs that you would have paid if you were a standard service customer. It goes back to the point I made earlier which is that as rate payers in Nevada because of the system that we have we're all responsible for paying those underlying costs whether we want to or not. And whether that's providing the kind of electricity that we want or not. And so if a company like Apple wants to go out and do that because of the system that we have they have to pay that cost and that's fair because that cost shouldn't be shifted to somebody else to pay. But if we didn't have that underlying obligation then a company like Apple or Switch and many others would be able to invest directly into renewable energy projects without having to pay that adder for NV Energy's basic system costs and that would spur investment because frankly the price of that investment in renewable energy would go down. And so I think you would see a lot of companies doing that. You know the interest in investing in renewable energy is very apparent particularly on the commercial level. In the last year we've seen a lot of large gaming properties who have tried to exit the system and one of the things they all talk about is wanting to get more affordable renewable energy. They want to make that investment and we just can't provide competitively priced renewable energy at the scale that companies like that are looking for in today's in the system that we have today. And-and their interest in renewable energy reflects the national trend in that way. So 60% of Fortune 100 companies have a renewable energy goal. 43% of Fortune 500 companies have a renewable energy goal or a greenhouse gas emission goal. It's-it's becoming a trend if it's not already that these companies want to invest in that type of-of product, that type of energy and unless we can meet that demand we're not gonna see them do that in Nevada at the scale that's possible.

Okay now companies decide most of the people that are going to be deciding on this aren't companies you know they're individuals, they're residential users, we've got about a minute or so left so what would you say they need to take away from this? How would their lives change and what's your final message?

Well for a standard residential customer their lives would change in that they'd be given the opportunity to buy electricity just like everything else. That should drive down the prices as I discussed before and give them also the opportunity to buy more renewable energy if that's what they value. Right now we only have the amount of renewable energy in the system, the type of technology in the system, to be more efficient to deliver more green energy that the Public Utilities Commission tells us we can have. And this puts the power in the hands of the people.

Okay we have fifteen seconds any closing thoughts?

My closing thought is this should also create jobs. In Texas they opened their market after ten years they created 10-thousand wind jobs and in a number of other states they have ext-exorbitant amounts of particularly renewable energy jobs because they opened their market and allowed the type of investment we're talking about.

All right Lucas thank you so much for your time I do appreciate it.

Thank you.

All right well coming up on Face the State I'll sit down with the opposition to Question 3 to hear their arguments, that's right after the break.


Arianna Bennett: Welcome back to Face the State, we've heard from the side working to pass Question 3 now we'll turn it over to the opposition. Danny Thompson with the Nevada AFL-CIO is here now to talk about that. Danny thank you for coming on the show.

Danny Thompson: Thank you.

Okay so start us off generally, why are you opposed to Question 3?

Every state that has done this has seen a rise in the residential rates and not insignificant rises, significant rises. And since 2,000...between 2000 and 20013 California saw a 35% increase in the residential rates. During that same period of time Nevada saw a 25% decrease. In fat there's another decrease coming right now to NV Energy users. So the first reason is rates will go up, there's no question and I have the rates for every state in the United States. We're currently below the national average and the states that have done that have seen- you know some of these states are 19 cents a kilowatt hour, we right now are 8.8 cents a kilowatt hour. And so the first thing is that we don't want to see rates to increase. The second reason is this is a constitutional amendment and to put something like this in the constitution is a huge mistake. And the reason is this: you know it's a five year process, two election cycles and once it's in the constitution you can't take it out. The legislature can't change it once it's in there and you know without another vote of the people there you can't make any adjustments so once this is done and there is some change you can't change it.

But the legislature would be responsible for writing up the details to begin with, correct?

They would write the details but the you know in effect in a deregulated market it would impact renewable energy because there would be no portfolio standard, there would be no way to enforce it. And these companies that would be providing this power would be somewhere else and they would be using the cheapest version of power that they can provide which is coal and you know you wouldn't be able to enforce the portfolio standard on these companies.

Why not? I don't understand why you couldn't put provisions in place, have a regulatory board?

In a regulatory board- in a regulatory system there is a portfolio standard in the law, I don't know how you would enforce this on some company who is selling it at the lowest price point that's not in the state, that's going to be a trick and-and if you do if you somehow change that who's going to pay for this giant PUC because currently the PUC is in a regulated monopoly and would have control over a single company. If you open this up to every provider in the United States how would you control t? And you know the companies that want to do this are very sophisticated operations. They have people that would be buyers and would buy power at the lowest possible rate. Residential users are not sophisticated in this. We're worried about you know door to door salesmen coming around and trying to sell you on some deal and without a regulatory body to control that you're going to have fraudulent things happen, you're going to have people sell them things that they don't need or can't do and tell people whatever they want to tell them and so it just doesn't make any sense either from a price perspective or a re-renewable energy perspective or changing the constitution. The reason that you don't want to do this, I mean the legislature makes mistakes and the legislature then can go back and fix these mistakes. If this is done wrong there's no fixing this. You would have to go once it's implemented and they make those changes you would have to go back to a vote of the people twice to make a change.

Now energy monopolies have been called outdated, they were put in place a long time ago before other sources of energy were really available and it's been said that the monopoly discourages renewable energy which is obviously a direction that Nevada wants to move in, so what's your response to that?

Currently NV Energy has a thousand megawatts of solar in the desert in Las Vegas, utility grade plants that are the largest in the world and they continue to provide that to us. And so this energy that's being used here today is partially supplied by solar. We have a plant in Tonopah that is a solar plant that heats molten salt and stores it under-under ground at night and then at-at night it's pumped above ground and runs a boiler. And so it's renewable energy. We have geothermal plants in northern Nevada. And so that standard is in place and they're well ahead of meeting that standard and they're doing a great job right now.

Now the Public Utilities Commission recently made a decision that did have the consequence of driving out rooftop solar companies for individual users, we're talking about you know families, home owners, that sort of thing, who'd be affected by this. The PUC made this decision that drove them out. What would be the solution to bring them back in if not deregulation?

In fact that's not true. The PUC made the decision that said because solar doesn't solar has never paid for itself and certainly rooftop solar and distributive solar has not done that. And so in order to make it attractive they put a subsidy in place in the legislature in effect forcing the company to pay a higher rate than the power is worth. All the PUC did they said if you are a rooftop solar person that was net metering you can only regain what the power is worth and so at the time they were forced to pay retail to a-a homeowner at about 12 cents a kilowatt hour when NV Energy was producing it at these plants in Las Vegas for about 4. So they had to pay 8 cents about what it was worth. The PUC all they-all the PUC said was you can only sell it for what it's worth and it reduced it to 4 cents. Now that didn't drive anybody out what the people who left weren't so interested in rooftop solar they were selling leases on those energy then they bundled these leases together like the mortgage industry did and mona-sell them on wall street and to investors and that was what that's what's changed. Those are no longer attra-attractive instruments financially but you can still go and put a net metering array on your roof and still get the 4 cents a kilowatt hour. You're just not going to be subsidized by everybody else. And the reason they didn't want to be subsidized if you're a renter or a senior and you can't afford one of those things why should you pay the 8 cents to someone like me who could afford it. That-that was the ruling of the PUC.

Okay. Well it did have the ultimate affect that most rooftop solar companies did move out of Nevada. I think it's understandable that most people would want them to come back, better to have a flourishing solar industry here in one of the sunniest states in the nation right? So what's the alternative then to to retract? I guess what I'm asking is how do you bring that back? How do you make sure that it does flourish?

I-I they didn't all leave, Bombard Electric in Las Vegas, there are companies in Las Vegas and other places that are still doing that. It just all-all it did was say it's not fair for me to subsidize you when you can afford to have that. You can only recover what it's worth. And so the reason those companies left was because they weren't able to sell the leases anymore and the leases were what the financial instruments  were what made it attractive.

Okay now going back to deregulation some Nevada businesses have already gotten away from getting their power from NV Energy, they're in favor of this it's been called business friendly to give businesses more choices. what's your response to that when Nevada is trying to attract more businesses in?

Currently and I lobbied this bill as a lobbyist because that's what I do, a user can leave NV Energy. AB 661 said if you use one megawatt you have the ability to leave the system and buy on the op-open market. One megawatt user is a Wal-Mart of a Laundromat or this building here certainly uses more than one megawatt. The only proviso was that if you leave you have to pay the stranded cost that are in the system and the stranded cost are this: When you built this building NV Energy had to put in systems to provide energy to you and they paid for that, all the users paid for that. And what this-what AB 661 says if you use a megawatt you can leave and you can buy on the open market but you have to repay the other people for the cost of what was the infrastructure that was put in for you and in the case of a large hotel it's millions of dollars. I mean in some cases $80 million dollars and they don't want to pay that stranded cost. They want us to be stuck with it. And in this system if you deregulate NV Energy will still be here, they'll be a wires company, but they are going to have to be paid for those stranded costs somehow and that alone is going to drive your rates up by-by itself. The other thing that this impacts are coops because it applies to everyone. And in a coop it's a nonprofit operation. There are four in Nevada, at least four. If the big users fall out of a coop it falls apart and I don't know how you solve that. Because irrigators who, farmers who use pumps to pump water are the big users and they would be the ones who would leave leaving the residential customers in the coop and it wouldn't work at that point.

Okay well we've got about 30 seconds left so what's your final message to voters? What do you want them to take away?

Do not pass this you will be sorry, your rates will go up and you won't be able to change it and it's been a it would be a deregulation disaster for residential users.

Okay Danny thank you so much-

(overlapping) Thank you so much.

- for your time. I sure appreciate it.

(overlapping) Thank you.

All right that is it for this episode of Face the State but for more information on all of this just can head to our website that's KTVN.com. Thank you so much for being with us. We'll see you next week.

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