Nevada Voters Weigh Deregulation of Electricity Market
October 18 2016 - 8:29AM
Dow Jones News
By Cassandra Sweet
Nevada is the latest battleground in a national political fight
over whether consumers and businesses should be able to choose
where they buy electricity.
A November ballot measure backed by Las Vegas casinos and other
firms would end the monopoly of the state's largest utility, NV
Energy, owned by Warren Buffett's Berkshire Hathaway Inc., and
create a competitive retail power market where customers could
choose their provider.
The measure has bipartisan support from such figures as Sheldon
Adelson, owner of Las Vegas Sands Corp. and a major donor to
Republicans, and Senate Minority Leader Harry Reid, the retiring
Nevada Democrat.
It would lead to lower electricity prices and greater
opportunities to buy solar power for less than NV Energy charges,
argues Matt Griffin, chair of Nevadans for Affordable, Clean Energy
Choices, the group pushing the measure. Supporters are rolling out
internet, billboard, radio and television ads.
The measure is opposed by the state's AFL-CIO union, which
represents 200,000 workers. It is urging voters to defeat it over
concerns that the changes could boost consumers' utility bills and
cause utility job losses, said Danny Thompson, the union's
executive secretary and treasurer. Mr. Thompson pointed to
California, where power prices rose sharply in 2000 after the state
deregulated its power market and traders at Enron Corp. manipulated
that market.
NV Energy, which supplies power to 90% of the state, says it is
officially neutral on the measure, but it has warned lawmakers in
an August document about unintended consequences, such as potential
price increases and job losses that could follow if it passes.
The proposal, which would amend the state constitution, would
direct the state legislature to draft new rules, and require
another round of voter approval before becoming law. NV Energy
would continue operating the grid and charging customers for
delivering power over transmission and distribution lines.
If the campaign ultimately succeeds, Nevada would join New York,
Texas and about a dozen other states where consumers and businesses
can choose their electricity provider.
Nearly 19 million residential, commercial and industrial
customers across the U.S. bought power in 2015 from suppliers that
weren't traditional utilities, up from less than 9 million in 2004,
according to the Energy Department.
Power prices in states with restructured power markets rose from
1997 to 2007, according to a 2015 report from researchers at the
University of California. But they fell in the following five years
-- along with falling natural gas prices -- while prices in
regulated states rose steadily over the 15-year period, the report
shows.
About 72% of Nevada voters support the measure, according to a
September poll by Suffolk University in Boston.
"We'd like to see energy choice because we want access to the
best renewable energy resources and other cost effective sources,"
said Ron Reese, a spokesman for Las Vegas Sands. Las Vegas Sands is
backing the campaign along with MGM Resorts International, Wynn
Resorts Ltd. and Switch Ltd., a data-storage firm based in Las
Vegas.
All four companies asked the state Public Utilities Commission
for permission to leave NV Energy service. The commission approved
the casinos' departure, in exchange for exit fees of $87 million
for MGM, $16 million for Wynn and $24 million for Sands, but it
denied Switch's request. MGM paid the fee and is now buying power
from Tenaska Power Services Co. Sands and Wynn didn't pay the fee
and still buy power from NV Energy. Switch is suing the commission
in federal court.
Switch estimates it is currently paying NV Energy as much as 80%
more for green power than it would pay a competitive supplier, said
Adam Kramer, an executive vice president at the company. "In an
open market, you get better prices because people are competing for
your business," he said.
NV Energy declined to comment on that estimate, citing the
litigation between the companies.
The deregulation push is part of a larger wave of challenges
hitting the U.S. utility industry, which include weak power demand
and competition from new technologies such as rooftop solar panels,
industry watchers say.
"In state after state, regulators are being pushed to revisit
some core aspects of utility regulation in order to accommodate the
future model of what electric utilities are going to look like,"
said Kira Fabrizio, a professor at Boston University's Questrom
School of Business.
(END) Dow Jones Newswires
October 18, 2016 08:14 ET (12:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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