Powers that be

Public shut out of utility legislation, putting ratepayers at risk

Sen. Kelvin Atkinson speaks in a legislative hallway with Assemblymember David Bobzien, right, and journalist Jon Ralston about Senate Bill 123.

Sen. Kelvin Atkinson speaks in a legislative hallway with Assemblymember David Bobzien, right, and journalist Jon Ralston about Senate Bill 123.

Photo By Dennis Myers

An effort at the Nevada Legislature to shield NVEnergy from utility regulation prompted a surge of consumer activism.

The drama got underway on April 3 when the corporation announced that it will close its environment-unfriendly coal-fired plants, starting with Reid Gardner in the south next year, and finishing with its northern plant at Valmy in 2025.

While basking in the favorable publicity from that announcement, NVEnergy said it would offer an amendment to Senate Bill 123 to help it accomplish the phase-out of coal. That raised suspicions because some lawmakers said there was no need for legislation in order for NVEnergy to go ahead with its plans (“Bad days in Newcastle,” RN&R, April 18).

S.B. 123, sponsored by Sen. Kelvin Atkinson, was a measure intended to foster renewable energy. Atkinson consented to the amendment. The public has never been permitted to comment on the amendment, only on the original bill. But selected groups were permitted to testify.

Objections to the amendment included a hold-harmless clause for shareholders but no protection for ratepayers, plus a balloon payment years down the road that could also threaten ratepayers. And critics said the bill would circumvent the public utilities regulatory process.

A flyer circulated by NVEnergy argued that its amendment would “retire 800 MW of company-owned coal-fired generating plants, acquire or construct 550 MW of capacity to replace the retired … plants, acquire or construct 50 MW or renewable facilities, issue requests for 300 MW or renewable energy, and propose rate mitigation under certain circumstances.”

NVEnergy called the initiative embodied by its amendment “Nvision.” (This is also the name of a Nevada state wellness program, a Sparks/Las Vegas home improvement company, a Grass Valley television equipment corporation, and a chain of laser surgery clinics.)

The dispute between NVEnergy and its critics did not seem to catch fire, even after legislators expressed their concern and the Las Vegas Sun reported on April 8 that NVEnergy “can accomplish [the coal switch] through existing regulation; a change in state law isn’t necessary.

In the meantime, there was another amendment being worked on and circulated among players that set off further alarm bells because it was considered much worse than the original amendment. That was when “people started coming out of the woodwork on this thing” to fight the measure, said one lobbyist.

Among those alarmed was Tim Hay, former state consumer advocate. (The consumer advocate post represents the public before the Public Utilities Commission.) Hay and others quickly formed and incorporated a new organization, the Nevada Consumer Protection Alliance. Hay asked his former boss, Frankie Sue Del Papa, to speak out on the amendment, which she did. Del Papa’s stature as a former Nevada attorney general and secretary of state kicked the issue to a new level in the legislative halls—though most journalism entities continued to ignore it. That was particularly surprising because of the newsworthy wording of the amendment, such as language permitting the state Public Utilities Commission to act only “so long as there is no adverse impact on the utility shareholders”—an astonishing gift to the corporation.

“I see this as a consumer protection issue,” Del Papa said. “Never before has a bill been introduced that has such guarantees to shareholders.”

Atkinson was distressed by the controversy, and felt blindsided by fellow Democrat Del Papa failing to give him a heads-up that she was entering the fray. “My own party, and I have to read about it in the paper?” he said.

Lobbyist Marlene Lockard, who by default—other figures wanting to stay out of the legislative building—became the principal lobbyist against the amendment, said it was her fault that Atkinson had not known about the formation of the Alliance or Del Papa’s participation. “I apologized, because I should have told him this Alliance had formed prior to it being in the press.”

Atkinson said he was untroubled by the NVEnergy amendment not being submitted as a stand-alone bill instead of as an amendment, and that he did not support any legislation that would circumvent the regulatory process. “If we start allowing them to do that, we’re all in a lot of trouble,” he said.

After hearings by the Senate energy and finance committees, the bill passed the Senate. During those committees’ proceedings there was no public comment on the amendment.

Atkinson predicted that at a May 17 meeting of the Assembly Commerce and Labor Committee last week, critics would be satisfied by the corporation’s concessions: “A lot of people are going to be singing ’Kumbaya.’” It didn’t exactly work out that way.

NVEnergy offered a new amendment, but it was a “work session” of the committee, so testimony could only be given by those invited by the committee, chaired by the bill’s Assembly sponsor, David Bobzien. Testimony was taken from the casino industry, labor leaders and the Public Utilities Commission. The state consumer advocate was not invited to testify, nor was the public.

The gambling industry, said one player, has a big stake in the bill because it would have a lot of impact on the casinos. But the same could be said of most industries. Labor unions, hungry for jobs, are among the bill’s strongest supporters.

“It would have had a major impact on the casinos,” Lockard said afterward. “We think it has a major potential impact on ratepayers.”

At press time, the meaning of the new amendment was still unclear. Hay said, “I haven’t crunched some of the numbers I wanted to crunch yet, but I have seen enough to know that it contains loopholes that would guarantee higher rates than otherwise would occur.”

Nevada Consumer Advocate Eric Witkoski said he was at a funeral during the May 17 Assembly meeting, but his aide Dan Jacobsen was present and could have testified. “They make the rules,” Witkoski said. “I think we could have provided some helpful information.”

Jacobsen said one good part of the new amendment is that it reduced the amount of generating capacity NV Energy could build or obtain without state approval. But the downside, he said, is that it still circumvents the Public Utilities Commission, by guaranteeing more than 500 megawatts of capacity without PUC authorization, which could put ratepayers at risk. The last generating plant constructed, north of Las Vegas, cost more than $700 million.

“The PUC looks at the need that the company has for new generating capacity,” Jacobsen said. “They do this every three years. It’s a formal process. This bill just says that the company gets this amount of generating capacity, and the commission can’t stop it.”

Lockard said one of the principal objections, besides the content of the amendments, is NVEnergy circumventing the normal legislative process. She said other players must use a bill drafting request (BDR) instead of piggybacking on a popular piece of legislation already in the pipeline.

Lockard said, “We’re concerned about the process. Last session [2011], on the last night of the session, NVEnergy came with a major amendment to a bill, and ultimately the governor vetoed that. Then in the last week, deadline week, NVEnergy had time to envision, have logos made, labor testify, everyone testify. Why couldn’t they find the time to get a BDR like everyone else does? Why do they never go through the process that the rest of us are held to at the Legislature?”