Tuesday, April 9, 2013

Behind the (Coal Fired) Smoke & Mirrors

Last week, many were shocked by NV Energy's sudden commitment to shutting down the last of Nevada's coal fired power plants and transition to renewable energy & natural gas. However, this move actually wasn't all that sudden. NV Energy was plotting this behind the scenes. And perhaps NV Energy executives were hoping that the "surprise" announcement would catch the Nevada Legislature by surprise.

At least Jon Ralston wasn't caught completely by surprise. He asked NV Energy CEO Michael Yackira about his big new energy plan last Thursday. And of course, Yackira said it was all good for everyone.

(The fun starts at 19:23.)

However, not everyone is convinced. On KNPR's "State of Nevada" this morning, Dan Jacobsen begged to differ.

Dan Jacobsen of the Bureau of Consumer Protection did the math, and realized that NV Energy wants to replace 1,000 Megawatts of coal power with 2,700 Megawatts of natural gas and coal. So in the process of winding down its coal plants, the company will nearly triple its generating capacity -- despite a decline in energy demand, Jacobsen said. [...]

“If the legislature were to approve it as they’ve proposed it, this would guarantee the company that, in a period of time when there isn’t much growth, they get to build and add more investment to their rate base, which will result in larger profits over about a ten to twelve year period,” Jacobsen said.

But how will it work out for consumers? Although the investment in new energy may pay off in 30 to 40 years, in the next decade or so, customers will pay more for NV Energy’s investment in new sources of cleaner power.

“It’s about a 9 percent price increase, and that’s above inflation,” Jacobsen said. “A 9 percent price increase is pretty significant on customers, particularly, you know, Nevada has the highest of any Mountain West electricity rates, so adding 9 percent to that is a burden that we think ought to be wrestled with at the Public Utility Commission.” [...]

“I’m very hopeful that the company will come to the negotiating table and come up with a more reasonable approach —one that just focuses on closing down the coal plants and replacing that capacity and leaving the rest of this to the Public Utilities Commission [PUC],” Jacobsen said.

NV Energy actually doesn't need the Legislature's approval to shut down its remaining coal fired power plants. So what is Nevada's electric monopoly waiting for?

That's a good question. What is NV Energy waiting for? An open door to natural gas fracking? New ways to sidestep the PUC? Or just new excuses to raise consumers' electric rates?

Or have NV Energy executives just made this decision to ditch coal out of the goodness of their hearts? If that's the case, then why not simply do what Dan Jacobsen suggested and just shut down the coal plants already while taking the rest of the proposal to the negotiating table? That's what they need to consider. And that's what the Nevada Legislature should demand.

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