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NV Energy’s NVision plan to decommission its coal-fired generating capacity years ahead of schedule, passed overwhelmingly back in June and supported by leaders in both parties, is beginning to generate resistance that crosses ideological lines.
The plan was originally embraced by the environmental left as a means of shutting down the utility’s remaining coal-fired power plants and replacing them with natural gas and renewable capacity in order to reduce carbon emissions. Though popular in Carson City, many conservatives outside the Legislature objected to the requirement to decommission fully-operational power plants and the increased costs that would be forced upon ratepayers.
NVision, which passed through the Legislature in the form of SB123, calls for all of the costs for decommissioning the plants, including costs to dispose of unused coal, to be borne by NV Energy ratepayers. In addition, the generating capacity would have to be replaced by as-yet-unbuilt power plants utilizing sources whose prices are either much higher or much more volatile.
Geoffrey Lawrence of the Nevada Policy Research Institute, an early and consistent critic of the plan, wrote a piece last week criticizing its design, which he claims benefits the utility’s investors and shareholders at the expense of ratepayers. As SB123 was making its way through the Legislature, NV Energy announced it was being purchased by a company owned by Warren Buffett’s Berkshire Hathaway.
Lawrence predicts the implementation of the NVision plan will cause electricity rates to skyrocket – somewhere between 11 to 50 percent.
NV Energy wanted the Legislature to order it to close its coal-fired power plants ahead of schedule and to replace the lost capacity with new natural-gas-fired power plants. But the utility also wanted to continue charging ratepayers for the shuttered coal plants until it received all of the remaining undepreciated balance on these plants, plus decommissioning costs, a guaranteed profit share and compensation for the stockpiles of coal the utility had purchased but no longer wished to use.
At the same time, ratepayers would be charged for the construction of the new, replacement power plants.
Watchdog Wire’s Thomas Mitchell pointed out last week that NVision’s vision of “going green” may be very costly, based upon the experience of other areas that have attempted it, such as Germany.
And if the solar and wind policy continues in place, the story says, electricity in 2020 will cost more than 50 cents per kilowatt-hour, up 40 percent from today’s price. Nevada residential customers currently pay less than 12 cents per kWh, but with SB123 in place don’t expect that to last long.
The Las Vegas Sun reported Thursday that the Sierra Club and other left-wing groups are expressing their displeasure with the law, or at least the manner NV Energy is complying with it.
But now, groups like the Sierra Club are questioning whether the utility really is going to close the controversial Reid Gardner coal-fired plant in Clark County by the end of 2014 as is required under the recently passed state law.
NV Energy claimed in August that it could keep the coal plants open longer.
“Barring an order authorizing the retirement, that facility can operate without certain upgrades until the middle of the summer of 2016,” an NV Energy lawyer said to the state’s Public Utilities Commission last month.
This is not sitting well with environmental groups that pushed for the law in the first place.
“The Commission cannot allow NV Energy to forgo the retirement of Reid Gardner (units) 1-3 merely because NV Energy is unable or unwilling to craft an acceptable plan,” wrote Derek Nelson, legal assistant for the Sierra Club in a filing with the Public Utilities Commission.
The bill passed the Nevada State Senate unanimously as both Republican Governor Brian Sandoval and Democrat U.S. Senate Majority Leader Harry Reid endorsed the plan.
However, when it was introduced in the Assembly, Sparks Republican Ira Hansen led opposition to the bill. During a committee hearing he pointed out the weakening of oversight by the Public Utilities Commission. He and other opponents described the potential for additional costs being borne by the utility’s ratepayers. In the end, nine other Republicans joined Hansen in voting against SB123 in the Assembly. But that was not nearly enough votes to stop the bill in the 42-member body.
Now it appears the unintended consequences are generating opposition that breaks down ideological barriers.
Tags: Brian Sandoval, coal, green energy, Harry Reid, Nevada Legislature, Nevada Policy Research Institute, NV Energy, NVision, renewable energy, SB123, Sierra Club
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