NV Energy is failing to get the best deals for its customers, resulting in higher than necessary rates, according to experts who say compared with other electric utilities in the west, the company is lagging in leveraging the lowest-cost, and most environmentally friendly options.
In September, an NV Energy executive told Clark County commissioners that fulfilling a legislative mandate to ensure half of its energy is from renewable sources by 2030 “is going to be a challenge.”
While supply chain issues have temporarily inflated costs for renewable projects, industry experts contend NV Energy is still obligated to employ competitive procurement processes for the best and lowest-cost energy options. But compared with other electric utilities in the western U.S., even its sister company PacifiCorp, NV Energy is lagging.
Xcel Colorado, in its latest Electric Resource Plan, said it garnered a record of more than 1,000 bids in response to requests for proposals to acquire 1,556 megawatts by 2028 to serve a smaller peak load than NV Energy’s peak load statewide.
The bids enabled the company to conduct “due diligence on potential projects” and model “different portfolios that could meet State of Colorado energy policy directives in a safe, reliable, and affordable manner.”
Xcel’s 2017 request for proposals resulted in more than 400 bids and clean energy projects that added 1,100 megawatts (MW) of wind power, 700 MW of solar, and up to 275 MW of storage. The projects saved customers more than $200 million.
PacifiCorp, like NV Energy, is owned by Berkshire Hathaway. PacifiCorp serves 2 million customers in six western states. The company received 617 proposals for 190 projects in 2022, representing 50,000 MWs of renewable energy plus 600 MW of battery storage, according to documents filed with the Utah Public Service Commission.
By embracing fair competition, NV Energy can ensure ratepayers are not burdened with unnecessarily high costs, while striving to meet renewable portfolio standards, according to Advanced Energy United, another industry association, which contends the utility, by short-circuiting its resource planning process, has failed to procure the best deals for customers.
Advanced Energy United tracks NV Energy’s use, or lack thereof, of competitive procurement, which requires the utility to go to market and ask developers to bring innovative, lowest-cost projects to the table.
“NV Energy hasn’t done that,” says Brian Turner of Advanced Energy United. “What we’re pushing for is the utility goes through an integrated resource process resulting in a determination of need and demand and says ‘Here’s what our existing resources are. Here’s what we need to fit future demand, and then the company goes out and does a request for proposal (RFP) and asks developers to bid on filling that need.”
NV Energy is currently requesting a fifth amendment to its 2021 integrated resource plan.
Turner says by avoiding having the Public Utility Commission (PUC) determine their needs, the utility can retain more control. Commission oversight gives developers “a much bigger shot at proposing good projects. When the utility keeps them in the dark, the utility can come back and negotiate harder. They’ve got the upper hand. Frankly, it makes their projects, the projects that they will have to develop or build and then buy from, more attractive.”
NV Energy’s emphasis of late has been on building or buying its own production facilities. Its fourth amendment to its 2021 integrated resource plan, approved earlier this year, allowed for the construction of a gas-fired peaker plant at a cost of $333 million.
“The basic incentive for utilities is they earn a guaranteed rate of return on capital assets,” says Turner. “So if they own it, they’ve got a fairly high guaranteed rate of return that is more attractive to them than a power purchase agreement, which just locks in their price of energy,”
Turner says NV Energy’s customers can’t be sure the utilities are getting the best deal that they can.
“In the case of natural gas assets, customers are locked in to having to pay the utility because it owns the natural gas asset, so we have to pay for that project over its entire life, whether it’s used or not,” says Turner, not to mention the “sticker shock for consumers” of high gas prices, as in recent years.
A new law sponsored by Assemblyman Howard Watts is designed to address the concerns voiced by the renewable energy associations by allowing the utility to submit integrated resource plans annually, and avoid amendments, which are not vetted to the same degree.
NV Energy did not respond to requests for comment.
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