Will Question 3/energy choice cost Nevada ratepayers extra money?

By Mark Garrett, National Adviser on Electric Utilities and Energy Regulation

With the fear of losing its monopoly this fall hanging over its head, NV Energy is eager to claim that switching to energy choice will leave Nevadans on the hook for billions of dollars in stranded costs that will lead to higher rates for consumers.

I conducted an extensive study to submit to Governor Sandoval’s Energy Choice Committee of Nevada’s energy infrastructure and the effects Question 3, the Energy Choice Initiative, would have on both ratepayers and the incumbent utility, NV Energy.

My research found that NV Energy’s current assets would actually provide a net benefit of $1.1 billion to Nevada ratepayers if it divested them under energy choice. It is important to note as an add-on to this analysis that Question 3 does not force NV Energy to divest its assets—per the statewide ballot, all it asks is whether or not the state energy electricity markets will be required to be “open” and “competitive.”

I also found, contrary to NV Energy’s claims, Nevada ratepayers are already paying for stranded costs as a subset of the total cost they pay for their power. This means that, regardless if NV Energy divests its assets at a gain or a loss, the amount ratepayers will be on the hook for will not be affected.

The bottom line is NV Energy’s claims are untrue—energy choice will not cost Nevada ratepayers extra money. If anything, ratepayers will receive a monetary benefit for choosing Question 3 this fall.

About Mark Garrett

Mark Garrett is a nationally recognized adviser specializing in electric utilities and natural gas distribution and serves as an instructor at the New Mexico State University Center for Public Utilities. He previously served as an analysis for Oklahoma’s Corporation Commission, focused on auditing major public utility companies. He testified before Governor’s Sandoval’s Committee on Energy Choice and authored a detailed report on The Energy Choice Initiative in Nevada.