Despite neutral stance, NV Energy execs warn lawmakers of unforeseen costs and risks with deregulation vote

NV Energy executives repeatedly asserted they were neutral on the ballot question that passed last year and would open up the power market in Nevada. But at the Legislature on Wednesday, executives from the company warned a panel of lawmakers that breaking up the company’s legalized monopoly would free the utility from the responsibility of being the last resort for customers and of being in the power generation business.

NV Energy executives, including CEO Paul Caudill, told legislators on a seven-member Assembly energy subcommittee that opening the state’s electrical market to competition through the so-called “Energy Choice Initiative” would prove complex and costly.

Company executive Carolyn Barbash outlined a number of “potential transition costs” and “fundamental assumptions” the company was making ahead of an expected major shift in how the energy market functions.

Barbash said that if voters move forward with the measure, which was financially backed by data center company Switch and the Las Vegas Sands casino company, the utility would divest all existing power plants, power purchase agreements and gas transportation contracts. While NV Energy is in the business of power generation now, it would transition solely into a transmission and energy distribution company.

The company would also no longer be the “provider of last resort” -- a default energy supplier for customers who don’t have other options or choose not to shop around for electricity -- and Barbash said that continuing employment of the power provider’s 2,465 employees was still an unresolved question.

“It’s going to be complicated,” she said.

Nevada voters approved Question 3 by an overwhelming 72 to 28 percent margin during the 2016 election, but the measure needs to be approved by voters again in 2018 to become part of the state Constitution.

In the meantime, Barbash laid several “potential transition costs” or down-the-road problems for state lawmakers ahead of a possible transition.

These included creating and operating a number of regulatory bodies to manage a newly opened power market, which would feature bodies responsible for “market operations,” establishing a provider of last resort for power customers, reconfiguring customer service and billing processes to allow energy customers to choose between power providers, and managing the data exchange accessed by the utility, energy retailers and system operators.

“This isn’t deregulation, as we all know,” she said. “With more players, there will be more regulations.”

And more regulations would likely cost the state more to provide oversight and to actually implement an open market. Barbash cited the need to create a regulatory structure to license energy marketers, provide for audit and enforcement arms, create a central repository for customer complaints and educate consumers about choosing energy providers in the new market.

She also listed a potential need a need to downsize the company’s workforce and assets if they were no longer needed.

Despite the challenges, Caudill stressed that the company was neutral, and that the broad support for Question 3 was evidence that consumers wanted more choice in their energy providers.

“It’s not something that took us too much by surprise,” he said.

Disclosure: Switch and NV Energy have donated to The Nevada Independent. You can see a full list of donors here.