Soon-to-open Resorts World, NV Energy propose unique renewable electric service deal to state regulators

As Resorts World Las Vegas continues its march to the planned June 24 opening date, much of the spotlight will be shined on the vast amenities and ample star power heralding the opening of the 3,500 room, $4.3 billion casino resort.

But as guests arrive and fill up the Strip’s first new resort property since The Cosmopolitan opened in 2010, the electricity supporting everything from bedside lamps to the light show for a 4th of July Miley Cyrus concert will be powered by electricity procured or provided by NV Energy. 

A business taking electric service from the state’s primary electricity provider may not seem like news, but Resorts World isn’t being treated like most other electric customers. Instead, NV Energy and the casino are asking utility regulators to approve a unique market-based electricity supply deal aimed at ultimately powering the property with renewable energy.

A proposed energy supply agreement for Resorts World is the latest in a recent line of moves by NV Energy to keep its current and potential new large customers in the fold — from a special electric pricing deals powering the Raiders stadium to paying local governments substantial annual payments to stick with them as customers to establishing a renewable-based pricing plan for large customers.

The proposed energy supply agreement application with Resorts World is in the same vein — a bifurcated supply agreement would first see the utility purchase electricity for the casino resort on the wholesale market, and later dedicate a portion of production from under-construction renewable generating power plants to service the casino resort property. 

“The proposed clean energy supply agreement between Resorts World Las Vegas and NV Energy would provide the property with a dedicated, long-term resource for renewable energy for a minimum of 15 years, which we believe to be the next best step in achieving our goal of obtaining energy through 100% renewable resources,” Resorts World General Counsel Gerald Gardner wrote in an email.

The electricity pricing plan for Resorts World is called the Large Customer Market Price Energy Tariff, or LCMPE for short, and acts sort of like an incentive offered by cell phone companies — offered only to new utility customers who have not been approved by the PUC to purchase electricity on the open market and that average an annual hourly load of ten megawatts or more. It’s a pricing plan that NV Energy used on a similar project with Google’s Henderson-based data center.

The energy supply plan filing didn’t exactly come as a surprise — Resorts World and NV Energy announced back in 2019 that the companies had reached a 20-year-agreement for fully renewable bundled electric service, though most of the actual filings before the PUC have been made this year.

Because the proposed energy supply agreement was just filed this month, it will not take effect before the casino resort actually opens its doors and welcomes in visitors on next Thursday, meaning that Resorts World will pay the normal electric rates for a customer its size (residential, industrial and commercial customers all pay slightly different electric rates based on customer class).

The application submitted to the PUC splits the contract into short-term and long-term periods. The short-term period kicks in once Resorts World hits a certain threshold for average hourly electric load, and would see NV Energy serve electric needs by procuring and selling wholesale market energy to be “priced at an appropriate index pricing” or by using energy from excess capacity from the utility’s existing generating stations.

The long-term period would start no later than 2024, once under-construction clean power generating stations operated by or contracting with the utility achieve commercial operation — essentially cleaving out a portion of future produced renewable electricity for use by Resorts World.

In the application, NV Energy stressed that other customers would not see increased costs or forego benefits from the arrangement with Resorts World, but many of the specifics were kept under seal. The utility wrote in the application that keeping those portions confidential was a necessary step to ensure commercially sensitive information remained under wraps (an unredacted version was delivered to the PUC).

The redactions include information about the generating plants that Resorts World will receive dedicated electric service from and how long the contract extends, as well as anticipated electric load and the specifics on how electric pricing will be calculated.

In partially redacted testimony prepared by NV Energy executive Cynthia Alejandre, the utility said that approval of the energy supply agreement would be in the public interest not only by adding another major customer, but by also helping with job growth coming “upon the heels of the COVID-19 pandemic” and to serve as a “template” for other new large businesses coming to the state. (One additional rationale is also redacted).

More recently, NV Energy and Resorts World filed a joint petition with the PUC in April 2021 seeking a waiver to allow the casino resort to enroll in a special energy supply plan despite also temporarily taking normal service from the utility.

But PUC staff responded with concerns about granting a broad waiver before any details of an energy supply plan had been filed with the commission. In a separate joint filing made on Monday, NV Energy and Resorts World requested another temporary waiver against the requirement for a customer to not be a fully bundled customer of the utility, but “only for as long as necessary for the Commission to review” the energy supply agreement.

Fire managers prepare for summer blazes as the state faces severe drought conditions

Good morning, and welcome to the Indy Environment newsletter.

I’m writing this newsletter from Winnemucca. For the past month, I’ve been reporting out a story on the Thacker Pass lithium mine, which the Trump administration approved in mid-January. 

I’m getting a lot of community perspectives about the project, which would be located outside of Orovada. On Monday evening, I attended a public meeting about having the mining company relocate and rebuild the Orovada Elementary School because of safety concerns with more trucks hauling materials and driving through the area. A lot of perspectives from parents. My story should be coming out in a few weeks. In the meantime, send me any thoughts you have about the project.

As always, we want to hear from readers. Let us know what you’re seeing on the ground and how policies are affecting you. Email me with any tips or suggestions at daniel@thenvindy.com

To get this newsletter in your inbox, subscribe here.


Nevada is facing its worst drought in two decades. 

Nearly 95 percent of the state is facing severe to exceptional drought, according to the U.S. Drought Monitor. In April, most of the Great Basin experienced above-normal temperatures with little precipitation. As with much of the West, Nevada saw well below-average rain and snow for the water year, which begins in October. Snowpack peaked early, and snow is melting quickly. 

Gina McGuire Palma, a meteorologist who forecasts fire in the Great Basin, presented those statistics at a media wildfire briefing last week. The dry conditions, she said, are important for the forecasts facing fire managers as they start planning for the warm summer months.

When it comes to fire and drought in the Great Basin, the story is complicated. Although drought means less moisture, it also means that low-elevation grasses are less abundant and productive. That’s important because those low-elevation grasses fuel many of the large-scale fires across the Great Basin. The amount of acreage burned and drought are not always related in the Great Basin. But that doesn’t necessarily mean less potential for a bad fire season. 

What it means is that in a drought year, like the one we are seeing, the fire risk tends to be in mid-to-higher elevation areas, McGuire Palma said at the briefing. Another big factor is where the fire is. A smaller acreage fire in a highly-populated area or in sensitive wildlife habitat can have long-lasting effects. And there have been notable fires during drought years before. 

Prior to the media briefing, state, federal and local agencies briefed Gov. Steve Sisolak about fire risks facing the state. At the briefing, Sisolak described wildfire as “one of Nevada’s most challenging issues,” but he said agencies are “better coordinated than ever before.”

Kacey KC, the state forester for the Nevada Division of Forestry, said that better coordination is important in the Great Basin, where much of the land is managed by a variety of agencies. The federal government manages about 85 percent of land within Nevada, and one agency, the U.S. Bureau of Land Management, manages about 65 percent.

“We learned through many years of being jurisdictionally challenged that we had to work better together,” KC said. “And we actually also realized, awhile back, that not only do we have to be highly effective at wildfire suppression, but also need to work harder at really targeting our limited resources and funding at the areas that are most critical to reduce risk in.”

In all of this, humans play a big role.

Sisolak, in his remarks, underscored the effects that climate change is having on fires: “While wildfires are a natural part of Nevada’s landscape, the fire season is starting earlier each year and ending later. Climate change and cycles of drought are considered key drivers of this trend.” 

In addition to climate change, the vast majority of fires — about 67 percent — were linked to human activity last year. Sisolak implored residents to be aware of the risks of starting a fire.

“What we can do as residents in Nevada is be aware,” Sisolak said. 

More reporting on this from KNPR and the Associated Press. And tips for preventing fires.

Here’s what else I’m watching this week:


CARSON CITY AND CONGRESS

A massive energy bill drops at the Legislature: Sen. Chris Brooks (D-Las Vegas) dropped a major energy infrastructure bill last week with less than three weeks left in the session, as my colleague Riley Snyder reported. The legislation, presented at a roundtable with Sisolak and NV Energy, aims to increase the state’s transmission capacity (crucial for putting more renewables on the grid) and to require more investment in charging for electric vehicles. Both are central to the governor’s climate strategy, and backers of the bill argue that it is vital in order to ensure the state plays a central role in the transition from fossil fuels toward renewable energy. 

  • Most environmental groups support the broad components of the bill: They want to see more deployment of renewable energy, and transmission is going to be an important element of that. At a hearing Monday, several groups, including the Natural Resources Defense Council and Nevada Conservation League, came out in favor of the legislation. 
  • But some groups believe the legislation shortcuts comprehensive planning: For months, environmental groups have been pushing state agencies to identify land where energy development is appropriate and where it conflicts with other priorities, including recreation and wildlife habitat. They want to see policymakers working to prioritize new energy development, such as solar fields, on already disturbed land. The transmission lines matter, they say, because their alignment and siting often dictate where projects go. These groups want to see more comprehensive planning when it comes to building out a more renewable grid. Based on my reporting, they are not alone. Public land has many constituencies, and permitting conflicts are not limited to environmental issues.
  • There is also the question of regulatory oversight: The legislation dropped with only a few weeks left in the session. But given the presence of the utility at the unveiling of the complex bill, it is clear that it came out of negotiations between legislative leaders, NV Energy and the Sisolak administration. It’s worth noting that the Nevada Resorts Association came out in “technical opposition” because of the late bill introduction and sought changes that “retains authority and regulatory discretion to protect customers from increased rates and making projects more expensive than they need to be.”

Swamp cedar bill passes both houses: The Senate on Monday passed legislation to grant state protection to unique stands of low-elevation Rocky Mountain juniper trees in Spring Valley (known as Bahsahwahbee in Shoshone). The legislation, introduced by Assemblyman Howard Watts III (D-Las Vegas), would protect the trees, known as the swamp cedars, that stand as a sacred and spiritual place for Shoshone and Goshute communities. Sen. Ira Hansen (R-Sparks) was the only Republican senator who voted in favor of the bill, despite making remarks that questioned the accuracy of accounts of massacres that occurred at Bahsahwahbee and angering Indigenous advocates, as my colleague Jazmin Orozco Rodriguez reported.

A few pieces of legislation I’m watching as the session nears a close:

  • AB356: Banning Colorado River water from use in irrigating decorative turf
  • AB349: Ending a loophole allowing “classic cars” from evading smog rules
  • AB148: Preventing “bad actors” from getting a new mine permit
  • SCR10: Creating an interim study on hydrogen and lithium as energy sources 
  • SCR11: Creating an interim study on Sisolak’s “Innovation Zone” proposal
  • AB95: Adding an Indigenous representative to the interim public lands committee
  • AB146: Establishing a right to clean water, aims to better regulate indirect pollution 
  • SB285: Better integrating bikes into our road infrastructure
  • AB97: Creating a working group to look at “forever chemicals” known as PFAS
  • SB430: Restructuring the State Infrastructure Bank to fund climate-related projects
  • SJR1, AJR1, AJR2: The mining tax resolutions. Anything could happen. 

(This is by no means exhaustive. Let me know what I’m missing here — daniel@thenvindy.com. h/t to the Nevada Conservation League, which puts together a weekly list of bills to watch). 

Reauthorizing the Lake Tahoe Restoration Act: Sen. Catherine Cortez Masto introduced legislation last week to fund environmental protection at Lake Tahoe. The legislation has the backing of the entire Nevada delegation, the Tahoe Daily Tribune reported last week.


WATER AND LAND

“We’re going to have one of the lowest runoffs that we’ve seen:” SFGATE’s Julie Brown writes about low elevations at Tahoe, with an interview from the Truckee River Water Master. 

Diving to clean-up Lake Tahoe trash: “A team of scuba divers on Friday completed the first dive of a massive, six-month effort to rid the popular Lake Tahoe of fishing rods, tires, aluminum cans, beer bottles and other trash accumulating underwater,” the Associated Press reports. 

Biden considers new sage grouse rules: Associated Press reporter Matthew Brown reported last week that the Biden administration is considering a temporary ban on new mining across certain areas of public land in the West as part of efforts to recover the imperiled Greater sage grouse, which has seen significant population declines over the last half-century. From the story: “The Interior Department review comes in response to a federal court order and is expected to cover millions of acres of sagebrush habitat considered crucial to the bird’s long-term survival.”

Tracking a federal wild horse adoption program: “...records show that instead of going to good homes, truckloads of horses were dumped at slaughter auctions as soon as their adopters got the federal money. A program intended to protect wild horses was instead subsidizing their path to destruction.” Incredible reporting from the New York Times’ Dave Philipps.

Federal regulators to rule on Tiehm’s buckwheat: “The U.S. Fish and Wildlife Service agreed to make a determination on the listing of a rare Nevada wildflower as an endangered species by the end of the month,” reports Jeniffer Solis with the Nevada Current.

Water data is as important as ever: An example from California. 

For the mappers out there: A new, peer-reviewed Colorado River map is out. 

For the mappers out there (Part II): What is a summit? Great New York Times piece.

ENERGY AND CLIMATE

Google’s big geothermal announcement: Google is partnering with energy startup Fervo to develop a “next-generation geothermal project” that would help the company power its data centers and infrastructure in Nevada. Fervo expects to begin adding geothermal energy to the Nevada grid in 2022, according to a Google blog post, and the company views the project as a crucial part in its transition toward meeting its “moonshot” carbon-free energy goals by 2030.

  • From Google’s blog post: “Not only does this Fervo project bring our data centers in Nevada closer to round-the-clock clean energy, but it also acts as a proof-of-concept to show how firm clean energy sources such as next-generation geothermal could eventually help replace carbon-emitting power sources around the world.” 
  • “Next-gen:” In the blog post, the project is referred to as “next-generation” geothermal, distinguished from conventional geothermal because it uses advanced drilling, fiber-optic sensing and data analytics (the press release mentions AI and machine learning). But the project appears to be one step in the company’s larger plan to make geothermal more viable. At a keynote for Google I/O, an annual developer conference, CEO Sundar Pichai said geothermal “is not widely used today, and we want to change that.” 
  • That last quote is a big deal: As I’ve written in this newsletter before, developers have long seen an opening to deploy more geothermal, and Nevada is uniquely positioned. It has expertise, with a top geothermal developer headquartered here, and according to the U.S. Geological Survey, high potential for more geothermal development. Having a major company make a high-profile investment in geothermal is pretty significant.

Bury power lines? News 4-Fox 11’s Ben Margiott asked a top NV Energy executive.

An important utility debate is brewing: Los Angeles Times reporter Sammy Roth writes about a national debate over whether utilities should be allowed to charge their ratepayers for trade association fees, especially when those trade associations engage in advocacy activities. 

Massive clean energy bill expanding transmission, electric car charging stations gets first hearing; resorts opposed

Heralded as a transformative step to move Nevada toward greatly reduced carbon emissions through massive expansions in transmission and electric vehicle infrastructure, state lawmakers heard the first details of the legislative session’s biggest energy policy bill with just two weeks to go before the end of session.

Sponsored by Sen. Chris Brooks (D-Las Vegas), SB448 would expand the state’s transmission infrastructure in line with NV Energy’s multibillion-dollar Greenlink Nevada initiative, along with requiring a $100 million investment in electric vehicle charging stations, expanding rooftop solar to multi-tenant and commercial buildings and proposing a host of other measures aimed at lowering carbon emissions and building up renewable energy infrastructure.

During the bill’s first multi-hour hearing on Monday in the Senate Growth and Infrastructure Committee, lawmakers and clean energy advocates were not shy about pouring praise on the legislation — ranging from NV Energy CEO Doug Cannon saying the bill “positions Nevada as energy leader in the western United States for decades to come” to Governor’s Office of Economic Development Director Michael Brown saying “448 will be one of those bill numbers that lives beyond legislative sessions.”

Support was not unanimous — several progressive and environmental groups warned that a large infrastructure project could harm fragile ecosystems, and the politically powerful Nevada Resort Association (which represents many casino resorts that have left regular utility service but remain as transmission-only customers) testified in opposition, wanting the state’s Public Utilities Commission to have more authority over the transmission build-out.

Brooks, who sponsored legislation raising the state’s Renewable Portfolio Standard in 2019 and 2017, said those bills and past efforts were helpful first steps but that this legislation represented an attempt to “take a more holistic approach at carbon reduction planning for the electricity sector.”

“Imagine a world where in Nevada, we are making most of our own electricity with renewable resources, we're putting them in our vehicles, and we're driving our vehicles,” he said. “That closes the loop and keeps billions of dollars in our economy, and also makes it far more affordable for the individual who's driving the electric vehicle.”

SB448 has two main prongs — transmission and electric vehicle charging infrastructure.

The transmission portions would help finish NV Energy’s proposed “Greenlink” transmission plan, which received initial, partial approval from the state Public Utilities Commission in March. The project would build two major transmission lines aimed at forming a “transmission triangle,” expanding and linking the current 235-mile, 500 megawatt “One Nevada Transmission Line” that links Northern and Southern Nevada. 

Brooks said expanded transmission capacity would not only build up grid resiliency beyond the current One Nevada line — pointing at the 2021 Texas electricity crisis as a warning — but would also allow Nevada to more cheaply import renewable energy produced in other states and help diversify the current fuel mix.

“If we just connect the dots with a few transmission lines, we could realize that economic opportunity of being the hub of the western grid, and we could realize the benefits that come with all of that energy that we can export and all that energy that we move through our state,” Brooks said. “The benefits are billions of dollars of economic activity in our state and billions of dollars of private investment in our state and renewable energy projects.”

The other major portion of the bill would require NV Energy to propose and submit a $100 million spending plan for electric vehicle charging station infrastructure over the next two years, with a strong focus on historically underserved areas, outdoor recreation, transit agencies and fleet upgrades for state, local and federal governments.

Much of the three-hour hearing focused on the transmission aspects — a wide variety of groups testified in support including IBEW; businesses including Google, Ikea, Patagonia and Uber; Battle Born Progress and clean energy development groups including the Natural Resources Defense Council, Southwest Energy Efficiency Project, Nevada Conservation League and others.

Brown, who heads the state’s economic development arm, said corporations in and considering moving to Nevada were increasingly focused on renewable energy and meeting environmental goals, giving the state a potential leg up on business development if it further committed to renewable resources.

“For the first time, we sat with a manufacturer from the Midwest a few weeks ago, and they looked at us and the first question they had for us is they wanted to talk about renewable energy,” he said. “They wanted to know how we were producing it, how it was transmitted, what the prices were. That's a game changer. We've not had that before.”

Cannon, who helped present the bill, said completion of the Greenlink project would help create a “path forward for us to economically achieve the state's net zero carbon goals,” while opening up new areas for solar and renewable energy development currently cut off from transmission lines.

“We can produce energy in a lot of places in Nevada, but that doesn't do us any good if we can't get that energy from where it's produced to where it needs to be utilized,” Cannon said. “Transmission becomes the backbone that is necessary to fully utilize that energy.”

But that proposed infrastructure expansion attracted opposition from spokesmen for environmental groups including Basin and Range Watch and the Center for Biological Diversity who said they had strong concerns that the legislation allowed NV Energy to rush forward without enough time for environmental review or potential impacts.

“Instead of instructing state agencies to complete a clear-eyed, comprehensive review of where renewable energy might be appropriate in this state, SB448 would throw open the doors to our most wild and pristine landscapes and rely on the tender mercies of the market and fossil fuel companies like NV Energy to decide the fate of Nevada’s wildlands,” Center for Biological Diversity State Director Patrick Donnelly said.

Sen. Dallas Harris (D-Las Vegas), a former administrative attorney at the PUC, asked what would happen if the promised economic benefits don’t materialize — and how much risk was being shouldered by ratepayers.

Cannon responded that the Greenlink plan was “not a risk-free proposition,” but said the utility was prepared to move forward with the $2.5 billion infrastructure project immediately, noting that customers would not have to start paying for the project for several years and that any proposal by the utility would go through a contested hearing process before the PUC and ultimately have to be approved by the commission.

“There is no guarantee in this legislation that we will recover the dollars of this investment,” he said. “There's not. We have to proceed reasonably, and then we'll trust in the process on the back end that we have the opportunity to recover our investment and earn a reasonable return. It's kind of the regulatory compact that exists between the utility as a private entity and the state.”

But the proposed process in the bill attracted opposition from the Nevada Resort Association —  lobbyist Laura Granier said the group was in “technical opposition” because of the complexity of a bill introduced with only two weeks left in the legislative session. She said the association had proposed “clarifying changes” to the bill that would not affect the timeline but would ensure that the PUC “retains authority and regulatory discretion to protect customers from increased rates and making projects more expensive than they need to be.”

“The Commission needs the tools to keep an eye on that,” she said. “We're not saying that they shouldn't earn their return on investment, they should, but through the (Integrated Resource Planning) process they do get to recover costs.”

Both Brooks and Cannon said the bill would not have a sizable impact on utility customers — Brooks pointed to a slide showing the adoption of renewable energy increasing while average electric prices in the state had gone down. Cannon added that opening up transmission markets would help the state access lower-cost power from other areas, and that ratepayers wouldn’t see the cost of the expanded infrastructure until five or six years down the road.

NV Energy, in a filing submitted to the PUC as part of the initial Greenlink filing last month, estimated that customers in nearly all rate classes would see higher base power prices to help pay off the expansion of power lines. Cannon and others said in a previous forum on the bill that those estimates do not include potential benefits from increased transmission access.

Beyond transmission and electric vehicle charging, the bill also creates a Regional Transmission Coordination Task Force, a group of public and private industry officials tasked with helping the governor and Legislature determine the steps needed to join a western states regional transmission organization — an entity that coordinates, controls and monitors a multi-state electric grid. The legislation requires Nevada to join a regional transmission organization (RTO) by 2030, with options for the PUC to delay or waive the requirement.

The bill would also double an energy efficiency initiative for low-income customers from five to 10 percent of the utility’s overall energy efficiency plan, expand a state Renewable Energy Tax Abatement program to cover energy storage projects, reopen a discounted energy rate program that expired at the end of 2017 and require NV Energy to begin including a low carbon dioxide emission reduction plan in its triennial integrated resource plan.

Major clean energy bill expanding transmission capacity, electric vehicle charging finally introduced in Legislature

With less than three weeks left in the legislative session, state lawmakers are introducing a major, complex energy bill aimed at ramping up electric transmission capacity and electric vehicle charging infrastructure as part of the effort to move Nevada to near zero carbon emissions by 2050.

The bill, SB448, was introduced Thursday in the state Senate by Sen. Chris Brooks (D-Las Vegas), with the tacit support of Gov. Steve Sisolak and other major energy players who held a planned roundtable panel Thursday afternoon largely focused on cheerleading for provisions in the bill.

The legislation marks the latest effort by Brooks and Democratic lawmakers to further prime the pump for Nevada’s clean energy economy while moving the state away from carbon-heavy fuel sources and industries — following up on efforts in 2019 to boost the state’s Renewable Portfolio Standard to 50 percent by 2030, and setting a net zero carbon emissions target by 2050.

“The reason I ran for office is so that I could fight climate change and I could create economic opportunities for the state of Nevada,” Brooks said during the roundtable event. “This new energy economy that we have the opportunity to be at the forefront of, in the entire United States, is one of the best ways to take care of both of those things.”

Beyond the two themes of transmission and electrification of transportation, the bill makes a host of other energy policy related changes, including expansion of tax credit programs to energy storage facilities, allowing multi-family or commercial buildings to use the state’s rooftop solar net metering program and reopening a 2013 economic development rate rider program aimed at giving new large businesses a discount on energy costs.

While many facets of the bill are likely to attract some level of support from clean energy advocates, it also could face criticism for its late introduction date and heavy-handed way of fulfilling politically powerful NV Energy’s wish to build out transmission capacity — all but ordering the state Public Utilities Commission to revisit an earlier decision that only partially granted the utility’s planned “Greenlink Nevada” transmission line upgrade.

Several clean energy groups — including Western Resource Advocates, National Resource Defense Council and the Southwest Energy Efficiency Project — and northern and southern Nevada chapters of the International Brotherhood of Electrical Workers issued statements supporting the bill soon after it was introduced on Thursday.

Brooks — who in a previous interview attributed the delay in the bill’s introduction to backlogs in legislative drafting — said the key to unlocking further development of expanded renewable resources and meeting the state’s lofty zero-carbon goals lies in expanding transmission capacity.

He estimated that the state was looking at billions of dollars' worth of private clean energy investment in areas not currently served by transmission lines, and said the clock was ticking before federal investment tax credits ran out and made potential projects less desirable.

“For them to be able to do that, they need to have transmission built,” he said. “And if we don't start immediately on transmission, then we will lose the opportunity to attract that investment into our state.”

Transmission

The proposed legislation will undoubtedly boost the state’s primary electric utility, NV Energy, which has over the last 18 months focused on expanding the company’s transmission capacity within the state.

The utility released initial plans for a $2 billion transmission upgrade dubbed “Greenlink Nevada” in July 2020, aimed at upgrading existing power lines between Ely and Western Nevada (centered in Yerington), and a new line between Las Vegas and Yerington. That plan would create a kind of transmission triangle, expanding on the current 235-mile, 500 megawatt “One Nevada Transmission Line” and better linking the northern and southern parts of the state.

In March, the state Public Utilities Commission granted partial approval to the “Greenlink” plan — giving the NV Energy the authority to begin permitting and construction of the “Greenlink West” line linking Reno to Yerington to Las Vegas, but only approving permitting and not construction of the other section of line, Greenlink North — in part citing concerns expressed by PUC staff and large casino resorts that the project would drive up customer costs without sufficient benefit.

Brooks said the commission’s order was correct based on the information in front of them, but that state lawmakers needed to clearly indicate that expanding transmission capacity in the state is a priority.

“It’s not the PUC’s job to encourage economic development in the state of Nevada, it's the PUC’s job to keep the lights on,” he said. “And so the argument that we need transmission, so that we can become a regional hub for transmission in the West, and so that we can attract economic activity to our state, is not necessarily the regulator's job to figure out if that's a priority.”

The legislation will require NV Energy by September 2021 to file an amendment to its most recently filed Integrated Resource Plan outlining a construction plan for high-voltage transmission infrastructure to be placed into service no later than 2029. Language in the bill prohibits the utility from including any other transmission project as part of the plan and requires any proposed construction to increase transmission import into Northern Nevada by no less than 800 megawatts — all but naming the portion of the Greenlink plan not approved by the PUC in March.

Asked about a filing made by the utility last month indicating likely cost increases for customers after approval of the Greenlink project, Brooks and NV Energy CEO Doug Cannon said the analysis did not take into account the potential benefits and cost-savings associated with opening the state up to new markets. 

“I would say to the skeptics, and maybe to those who are concerned with that, that the data doesn't necessarily support that,” Brooks said. “Yes, you have to invest in these infrastructure projects, but the benefits economic, environmental, and cost of electricity far outweigh that initial cost.”

The bill also creates a Regional Transmission Coordination Task Force, a group of 18 energy industry-adjacent members tasked with helping the governor and Legislature determine the steps needed to join a Western states regional transmission organization — an entity that coordinates, controls and monitors a multi-state electric grid. The legislation requires Nevada to join a regional transmission organization (RTO) by 2030, with options for the PUC to delay or waive the requirement.

Electric vehicle infrastructure build-out

Beyond transmission, the bill also aims to spur greater adoption of electric vehicles throughout the state through a $100 million spending plan with strong focuses on underserved communities.

Under the legislation, NV Energy would need to file a plan to “accelerate transportation electrification” by September 2021, identifying plans to invest $100 million in specific electric vehicle infrastructure build-out programs over the next two years. Those would include:

  • An Interstate Corridor Charging Depot Program focused on expanding and supplementing the Nevada Electric Highway project that has brought electric vehicle charging stations to rural communities throughout the state
  • An Urban Charging Depot Program aimed at increasing access to charging stations in metropolitan areas for customers unable to charge vehicles at home, and also serving the needs of “tourists, delivery services and businesses that require access to public charging for fleet electrification”
  • A Public Agency Electric Vehicle Charging Program to serve the needs of, and lower barriers for, electrification of state, local and federal government agency fleets
  • A Transit, School Bus and Transportation Electrification Custom Program aimed at serving the needs of transit agencies, metropolitan planning organizations, the Department of Transportation, public school districts and some nongovernmental commercial customers who agree to electrify significant portions of their fleets
  • An Outdoor Recreation and Tourism Program aimed at addressing charging station infrastructure needs for the tourism and outdoor recreation economies in the state.

The legislation requires that 40 percent of program expenditures over the five programs be dedicated to, or made for the benefit of, historically underserved communities — a definition that includes Census tracts where 20 percent of households are not proficient in English or qualify under a federal Housing and Urban Development definition. It also includes schools where 75 percent of students are eligible for free or reduced-price lunch, or qualified tribal land under a state definition.

Another 20 percent of the funding must be earmarked for the Outdoor Recreation and Tourism program.

The legislation also would require NV Energy to include a comprehensive transportation electrification plan in future filings before the PUC, which could include a wider range of programs and incentives than what’s called for in the initial plan.

Tenant solar

The bill also would amend existing law to allow for a concept called “tenant solar” — allowing owners of apartments, multi-family dwellings or commercial buildings to tap into the state’s net metering program for rooftop solar. A similar concept was sponsored by Brooks in the 2019 Legislature but died without a hearing.

The bill allows for net metering at those types of buildings under certain circumstances, including a requirement that the rooftop solar system be located on premises and only delivered to residents or the building itself, that individual units don’t have separate meters measuring electric use and that persons or commercial entities in the building are not charged based on volumetric use of electricity.

Energy storage and rate riders

The proposed legislation also expands an existing Renewable Energy Tax Abatement Program — which grants partial sales and use tax and property tax abatements to qualified renewable energy power plants — to also include energy storage facilities.

The Governor’s Office of Energy administers the tax abatement program, and as of December 2020 had awarded abatements to 57 projects located in Nevada. To qualify for the abatement, projects have to meet minimum investment benchmarks and pay certain wages on construction.

The bill also would re-open qualifications for the state’s Economic Development Rate Rider program, established by the Legislature in 2013 to give large businesses new to the state discounts on electric prices over a range of years. 

The original version of the program set aside 50 megawatts of capacity for applicable businesses to take advantage of, but the program closed to new participants at the end of 2017 with about half of the capacity unclaimed. The bill would set a new deadline at the end of 2024 for businesses to apply for remaining capacity left in the program.

Updated at 4:17 p.m. to include comments from Brooks and others at a roundtable hosted after this story was initially published.

Lawmakers look to end a lucrative green building tax abatement program

Madori Vista townhomes under construction

For more than a decade, some of Nevada’s most iconic casino resorts and businesses have benefited from the same tax abatement program — giving substantial property tax breaks for new or renovated energy-efficient buildings.

The state’s Green Building Tax Abatements program is still in heavy use — a state report estimated more than $25 million in property taxes were abated through the 2020 fiscal year, with $105 million in property taxes abated since 2010. State budget analysts say that more than 160 buildings in the state — from Park MGM, Wynn/Encore and even the T-Mobile Arena — enjoy partial property tax abatements through the program.

But the abatement program’s days could be numbered.

Lawmakers in a joint budget meeting on Friday approved moving forward with the planned elimination of the abatement program, which will also see an estimated loss of $87,500 in program application fees. But the budget committee only deals with the financial impact — a bill draft request eliminating the program has been requested, but not yet been introduced so far this session.

So why the request to wind down the program? According to the Governor’s Office of Energy, which administers the program, adoption of the 2018 International Energy Conservation Code (model building codes adopted by many states for minimum design and construction standards related to energy efficiency) led the state to reassess the efficacy of the abatement program.

In a statement, GOE Director David Bobzien said the agency contracted with a third party to evaluate the relationship of the minimum energy efficiency required under the rating systems and the newly adopted building standards — finding that the minimum standards now exceeded the state requirements for the abatement program.

“The continuance of the GBTA program will allow property owners to receive a partial property tax abatement for building to the minimum standard already adopted in the state, which no longer aligns with the intent of the program as initially established in (state law),” he said in an emailed statement.

Current beneficiaries won’t be affected by the program ending, as approved buildings receive through the program a partial property tax abatement ranging from 25 to 35 percent for a period of either 5 or 10 years. Established during a 2005 special session, the abatement program made headlines in 2007 after it was partially blamed for contributing to a substantial education funding deficit in part caused by losses in local school support taxes (one analysis estimated that the original version of the abatement program would have seen Clark County lose up to 10 percent of its tax base and close to $1 billion in lost revenue over the two-year state budget cycle).

Editor’s Note: This story first appeared in Behind the Bar, The Nevada Independent’s newsletter dedicated to comprehensive coverage of the 2021 Legislature. Sign up for the newsletter here.

Clean energy advocates want more energy efficiency investments; NV Energy pushes back

What’s the cheapest kind of energy?

For advocates of SB382, the answer isn’t coal, natural gas, wind, solar or any other fuel source — the cheapest energy is the megawatt that never has to be produced.

That axiom is a favorite of energy efficiency advocates, who say the concept of not only increasing electric supply but also decreasing demand through better insulation, more efficient air conditioners or heating systems, and other projects will help reduce strain on the state’s electric grid and help consumers save money on their power bills.

That was the thrust of the argument made Monday afternoon in the Senate Growth and Infrastructure Committee, where clean energy representatives (Southwest Energy Efficiency Project, or SWEEP, and the Natural Resource Defense Council) presented SB382. The bill has four main components:

  • Directs NV Energy and the state’s Public Utilities Commission to establish a program required to produce electric savings equal to at least 1.3 percent of the company’s retail electric sales
  • Provides double funding for energy efficiency programs serving low income and historically disadvantaged communities
  • Requires a cost-benefit analysis for any energy efficiency programs proposed by NV Energy
  • Creates a performance-based earning opportunity for NV Energy as part of the energy savings program

Advocates estimated that full implementation of the bill would cost the utility on the high end somewhere between $65 and $75 million. Ellen Zuckerman, co-director of SWEEP’s Utility Program and co-presenter of the bill, said the advocacy group had commissioned a study showing the net economic benefits of the legislation would equal about $1.73 billion over the next decade.

Bill proponents noted that lawmakers had in 2017 and 2015 passed legislation requiring the state’s PUC to establish similar energy efficiency programs, but said this legislation was aimed to more dramatically ramp up energy efficiency programs. 

“The law that we passed in 2015 unfortunately buried the lede on the need to prioritize cost effective energy efficiency, so there wasn't really a lot of policy guidance for the commission when setting goals,” NRDC senior scientist and bill presenter Dylan Sullivan said.

But NV Energy testified in opposition to the measure, saying the electric utility “wholeheartedly support(s) energy efficiency” but had concerns about the bill’s potential financial impacts on customers and options already in place to encourage additional investment in energy efficiency plans — such as the alternative ratemaking structure adopted by lawmakers in 2019. 

NV Energy representatives also said that creation of a new energy efficiency framework would further burden the “already constrained resources at the Public Utilities Commission.”

“I do want to note we understand the frustration,” NV Energy lobbyist Marie Steele said during the hearing. “Regular regulatory processes take time, and the Legislature only meets every two years. But we are asking you to utilize the tools the state already has regarding energy efficiency targets and alternative ratemaking.” 

Ernest Figueroa, head of the state’s Bureau of Consumer Protection, also testified against the bill because of a section authorizing the PUC to adopt a performance-based incentive for the utility to administer an energy efficiency plan.

“(It) also essentially appropriates hard earned ratepayer money to incentivize the utilities to do what it already has a duty to do, which is to follow the law,” he said.

Sullivan said that even considering that lawmakers had passed previous legislation requiring energy efficient targets and that opportunities for expanded energy efficiency plans could be expanded in upcoming PUC dockets, lawmakers should nonetheless pass the bill to ensure that “fundamental aspects” of the state’s overall energy efficiency policy does indeed change.

“I think there are some things that we could change through an investigatory docket and working through the commission process,” he said. “But there are also some other fundamental aspects of the utility business model that need to change if we're going to reach higher levels of savings.”

Editor’s Note: This story first appeared in Behind the Bar, The Nevada Independent’s newsletter dedicated to comprehensive coverage of the 2021 Legislature. Sign up for the newsletter here.

Energy efficient appliances called ‘critical’ to addressing climate change

Assembly members Sarah Peters, Howard Watts II and Michelle Gorelow walking in a hallway in the Legislature Building

Government officials have set goals to combat climate change and increase the share of clean energy in the state, but according to Assemblyman Howard Watts (D-Las Vegas), energy efficiency is a “critical piece of the puzzle.”

That’s why Watts is sponsoring AB383, which was heard Tuesday in the Assembly Growth and Infrastructure Committee. The bill would set minimum energy efficiency levels for certain residential and commercial appliances and products, ranging from water coolers and air purifiers, to commercial fryers and ovens.

Less energy expended would result in avoided pollution, Watts told the committee, adding that using more efficient appliances and other devices could also mean spending less on utility bills.

Many appliances already have standards set by the federal government, but Watts said the bill is looking to “fill in the gaps where the federal government has fallen behind in setting standards.”

With the standards outlined in the bill, Brian Fadie, with the Appliance Standards Awareness Project, estimates that Nevadans could see up to $29 million in annual utility bills savings by 2035.

Any manufacturer, distributor, retailer or installer who violates provisions of the bill would be liable to a civil penalty, after a warning. The first penalty after the warning would be not more than $100 for each day of violation and for each act of violation; any following penalties would be less than $500 each day of violation and for each act of violation. 

Some committee members were concerned that the bill would force people who really could not afford to do so to buy new appliances, but Watts said the standards would only apply to appliances sold after the bill goes into effect in July 2023. 

Because energy efficiency technology changes and evolves each year, the bill is written to allow the state flexibility to adapt its guidelines rather than needing to revisit the statute every two years.

Watts said he is still working on amendments with the Southern Nevada Home Builders Association as it disagrees about the fireplace standards in the bill, which are based on Canada’s fireplace standard because the U.S. lacks such standards. 

Editor’s Note: This story first appeared in Behind the Bar, The Nevada Independent’s newsletter dedicated to comprehensive coverage of the 2021 Legislature. Sign up for the newsletter here.

Lawmakers take first steps to close the ‘classic car loophole’

In 2011, lawmakers modified the definition of a “classic car” to include any vehicle over a certain age that was driven less than 5,000 miles annually.

But that change in the law led to an “explosion” in “classic vehicle” license plate registration, Democratic Assemblyman Howard Watts (D-Las Vegas) said on Tuesday during a hearing in the Assembly Growth and Infrastructure Committee.

The number of cars in that category rose from about 5,000 to more than 32,000 vehicles today, all within the span of a decade. Those vehicles are not subject to the same smog emission standards that other, more modern vehicles have to follow.

Watts’s AB349 aims to close loopholes in the state Emissions Inspection System that allowed the increase in the amount of vehicles registered as “classic,” and implement a financial incentive to replace older polluting vehicles with “cleaner” transportation. The ultimate goal is to reduce pollution in the state, which contributes to climate change and poor health. 

The Department of Motor Vehicles’ special license plates category intended for collectors and hobbyists requires “classic vehicles” be at least 25 model years old, “classic rods” at least 20 years old, “old timers” at least 40 years old and “street rods” made before 1949. Currently, any model made before 2001 is potentially eligible for classic plates.

The bill would require classic vehicles to hold classic vehicle insurance policies. These insurance policies generally require an appraisal to set a value for the vehicle and have mileage restrictions to keep the vehicle protected and in good condition, Watts said. Having that insurance policy in place would close the self-report loophole, Watts said, as those who actually collect, rebuild or modify vehicles and invest great amounts of money in the vehicle are likely to have the appropriate coverage. 

During his presentation, Watts cited the American Lung Association’s 2020 State of the Air Report, which gave Clark, Washoe and Lyon counties failing grades for the number of high pollution days. Higher levels of pollution affect public health and can contribute to increased rates of asthma, lung disease and cancer.

“The legacy of segregation and the discriminatory location of freeways over the decades means that these pollution levels are often far higher for communities of color and for lower income neighborhoods,” Watts said during the hearing. 

Watts said he was open to including incentives to help people with older cars that would be affected by the bill, to either fix emission issues or provide a voucher to help with the cost of a newer car. 

“This would promote equity and close disparities as we tackle the health and climate issues, and it would have the added benefit of supporting our local repair shops and auto sales, both new and used,” Watts said.

Editor’s Note: This story first appeared in Behind the Bar, The Nevada Independent’s newsletter dedicated to comprehensive coverage of the 2021 Legislature. Sign up for the newsletter here.

Lawmakers preparing wide-ranging clean energy bill, includes $100 million for electric car charging stations

An electric vehicle charging station.

Over the next decade, Nevada’s largest share of carbon emissions is projected to shift even more from power plants to the cars, trucks and other vehicles that make up the state’s transportation sector.

That’s a big problem for state lawmakers and Gov. Steve Sisolak, who have publicly committed the state to reduce carbon emissions in line with guidelines laid out in the Paris Climate Agreement.

That’s why Democratic lawmakers, led by Sen. Chris Brooks (D-Las Vegas), are preparing to introduce a substantial energy policy bill in the 2021 Legislature that would mark one of the state’s largest investments in electric vehicle infrastructure — requiring NV Energy to spend $100 million over the next three years to construct charging stations throughout the state.

Brooks, who has generally taken the legislative lead on energy issues for Democrats since he was first elected in 2017, is planning to introduce the wide-ranging energy legislation that in addition to the charging infrastructure will also call for expanded transmission build-out, expansion of tax credits for utility-scale battery storage systems and from a kind of multi-state task force focused on the feasibility of Nevada and other Western states to a multi-state wholesale electric market sometime over the next decade.

The bill hasn't been introduced and some provisions are still being negotiated with major players in the energy policy world, but Brooks said the overall goal was to advance decarbonization policies that helped the state expand its clean energy economy.

“The cost of not fighting the climate crisis in our state is far greater...than the cost of actually doing it,” he said. “And so I don't necessarily think it's an either/or, I think we absolutely have to get to zero (carbon). And finding the way that we can do it that has little or no rate impact, and preferably has economic value for the state of Nevada, is our primary consideration.”

The concept of moving to a zero-carbon energy sector isn’t new; a bill introduced by Brooks and passed out of the 2019 session set a nonbinding zero-emissions target by 2050 while requiring more regular reporting of state greenhouse gas emissions, plus development of a state climate strategy.

The first version of that “State Climate Strategy” report was released in December 2020, and outlined a coordinated pathway for a transition away from fossil fuels and other sources of carbon emissions, including a cost-effective transition from natural gas and ways to electrify the transportation sector. (A plan to require more natural gas planning has attracted most early lobbying efforts).

Many of the provisions in Brooks’ planned bill echo that report, including the massive charging station infrastructure investment.

The proposed legislation would require an initial $100 million investment over three years for electric vehicle charging stations, with locations based on metrics such as miles driven and needs in underserved communities. Brooks said at least 40 percent of the new charging stations would need to be placed in historically underserved areas, with other areas of focus including schools, public facilities and in “entertainment” areas that could serve taxis or transportation network companies such as Uber or Lyft.

“We need to put charging infrastructure in places where it will get used,” he said. “It will get used by folks who traditionally are overlooked in this process, and it will help those who need the help the most to lower their operating expenses when it comes to transportation.”

It also would require NV Energy to include electric vehicle charging infrastructure plans in its normal, three-year Integrated Resource Plan filings that go before the state’s Public Utilities Commission.

The legislation goes beyond just electric vehicle infrastructure; Brooks said it also will include language making it the official state policy of Nevada to increase transmission capacity in the state.

Brooks said his legislation wouldn’t be “prescriptive” in terms of increasing transmission infrastructure build-out (such as telling the utility to build power lines in specific places) but rather would set a state policy to favor expanded transmission. A policy statement like that would be another factor for utility regulators to consider when proposals for expanded transmission projects are brought forward, likely during the triennial Integrated Resource Planning process.

“If I could just simply say, ‘Build it all, build it now,’ and that would be enough, that's what I would do,” he said. “But we're gonna have to lay out all the reasons why it's good. And all of those reasons need to be taken into consideration when a decision is made by a regulator.”

That state policy likely wouldn’t affect NV Energy’s current Greenlink Nevada proposal, a $2 billion project to build out hundreds of miles of new transmission lines across the state. The proposal is currently pending before the PUC and will likely be decided before the bill could be passed.

Other proposed changes likely to come in Brooks’ bill include minor clarifications to the Natural Disaster Protection Plan maintained by NV Energy, clarifications that utility-scale battery storage projects are able to access renewable energy tax abatement programs, and adoption of “tenant solar” — a concept allowing apartment complexes or other multi-family dwellings to enroll in the state’s net metering rooftop solar program (usually reserved for single-family residences).

Brooks said the legislation also would create or call for Nevada to join in a multi-state task force focused on bringing the state into a larger wholesale electricity market.

Wholesale electric markets are federally regulated entities that allow for electricity to be bought and sold by a wide range of market participants, from big electric utility companies such as NV Energy to rural electric cooperatives to independent energy marketers. 

Nevada serves the majority of its retail electric load (demand) with its own energy portfolio (supply). It’s technically already part of a wholesale market, the California Independent Service Operator (CAISO)’s Energy Imbalance Market, which covers real-time imbalances between electric supply and demand. That market is what makes possible the often repeated phenomenon of California paying Nevada to take excess solar energy.

But Brooks’ bill also will look at the feasibility of setting up a Western-state wholesale market in the form of a Regional Transmission Organization. Such an organization could link Nevada and other states under the umbrella of an organization that would coordinate, control and manage an electric grid spread across a greater geographical area than just state lines.

But to get there, Brooks said the state first needs to build out its transmission infrastructure.

“It makes no sense for Nevada to try to, in a vacuum, achieve zero carbon,” he said. “That's just an inefficient and short sighted way of doing it, and very expensive. But if we take advantage of our peak sun, and we take advantage of hydro and the Pacific Northwest and wind in Wyoming, and a load down in Southern California, and loads in the Southwest, we could take a look at all of those things.”

NV Energy’s plan to avoid a Texas-sized energy supply disaster next summer

In Texas last week, a massive winter storm froze the state’s electrical grid and left millions without access to reliable electricity, natural gas or even clean drinking water for days.

In California and across the southwest, a scorching heat wave six months ago contributed to an overstressed grid that knocked out the power supply for millions, leaving them without air conditioning as temperatures soared into the triple digits.

Nevada is not Texas, nor is it California. The state avoided rolling blackouts during the August 2020 heatwave (though NV Energy still issued a rare voluntary request for customers to curtail power use during times of peak demand), and hasn’t seen similar severe winter weather that knocked out many grid operations in Texas last week.

But 2020 wasn’t an anomaly. Issues of grid management and resource adequacy — having enough power to meet demand, the same issue that befell California last year and Texas this year — aren’t going away anytime soon. The future for the planet is an increase in extreme weather events, and Nevada is in the bullseye of states most likely to experience massive temperature swings and the full effects of climate change. 

Over the past six months, NV Energy officials have been answering questions about the August near-crisis through an investigatory docket opened by regulators at the Nevada Public Utilities Commission, focusing on both what exactly drove the utility to request customers curtail power use on Aug. 18 and 19, but also on broader issues of resource adequacy and how best to avoid a California or Texas-style grid disruption.

The electric utility company has also taken steps to prepare for next summer beyond answering those questions. In late December 2020, it filed an amendment to its Energy Supply Plan that proposes to spend an additional $61.3 million to help prepare for an expected hot summer and additional demand in 2021.

The dollars will help fund projects or infrastructure developments aimed at increasing capacity during hot summer months, budgeting for a hotter-than-normal summer in internal supply planning and raising the required reserve percentage to help with any temperature variances or unexpected increases in demand.

But that additional spending will still leave the utility continuing to rely on open market purchases to meet expected demand — around 900 megawatts per month between June and August 2021. (A megawatt represents enough power for several hundred residential homes, though exact figures vary on source of energy and average residential electrical use).

But that reliance on market purchases to meet expected demand for next summer could be a potential cause for concern: PUC staffers wrote in an investigatory docket that they were concerned a similar seasonal heat wave and subsequent curtailment of open market power in 2021 “may not be a plan for success.”

The investigatory docket also revealed another stress factor on the grid: unexpected load demand from large casinos and businesses that previously filed to leave utility service, but whose alternative electric providers faced the same constraints on electric power and were unable to deliver the promised load, leaving NV Energy to fill in the gaps.

And while NV Energy has invested in expanded large-scale battery storage technology, its move to adopt higher standards of renewable energy over the next decade will also add stress to the grid, because of the simple fact that solar energy is intermittent. 

Dealing with that combination of factors is a problem that the PUC, NV Energy and other interested parties will likely deal with in future utility planning filings and will be affected by NV Energy’s moves to sizably increase its reliance on renewable energy and a proposed major, billion-dollar transmission upgrade.

Dylan Sullivan, a senior scientist for the National Resource Defense Council, said that smart grid management planning would avoid any potential or perceived conflict between an increased reliance on renewable energy and the reliability of the state’s power supply.

“Sometimes it's presented as we have to make a choice between renewables and reliability,” Sullivan said. “We really don't have to make a choice if we plan. We can have an affordable, reliable and highly renewable energy system, but we do have to plan for it, we do have to look at what happens when a bunch of things go wrong.”

Open positions and limits on the market

There are three ways that NV Energy creates or obtains electrons that power homes and businesses throughout the state.

The utility company owns a group of about a dozen generating stations (26 actual generating units) — largely natural gas-powered, but with some solar projects in southern Nevada and the coal-fired Valmy power plant near Battle Mountain.

NV Energy also contracts with about 43 generating projects through Power Purchase Agreements, which are long-term contracts with private-party developers to build and generate a certain amount of electricity for the utility company. Many of NV Energy’s recent investments into large-scale solar projects have come through these agreements, also known as PPAs.

But to meet demand requirements, especially during summer months where normal capacity isn’t enough to meet the heightened demand, NV Energy (and other utilities) rely on market purchases of electricity to fill those gaps.

Market purchases fall into three categories: real-time, day-ahead, and term. Term refers to open market purchases that are typically negotiated months in advance, while real-time and day-ahead are what they sound like, closer to real-time needs. NV Energy said in PUC filings that it prefers “firm energy products,” which means there is a commitment placed on the seller of the electricity products to deliver the goods.

Resource planning isn’t like horseshoes or hand grenades; getting close but falling short of meeting actual demand means serious system reliability issues and blackouts. That’s why the utility overshoots its expected demand with a planned reserve margin over expected demand, which last summer was around 13 percent system-wide. 

NV Energy plans resource adequacy in a few ways. It’s required by law to file an “Energy Supply Plan,” which is the utility’s strategy and estimates of how much electricity it will need to procure for customers, and how it plans to obtain that electricity. The last Energy Supply Plan was approved in November 2019, but the utility regularly files amendments to the plan.

The utility also uses a seasonal “laddering” approach for market purchases, meaning it discusses and makes further adjustments to planned market purchases every quarter based on more timely weather forecasts and other more up-to-date market conditions.

A near-disaster in August

That normal strategy of relying on open market purchases to fill the gap between supply and demand almost failed during the week of Aug. 17.

A blistering, record-setting heat wave blanketed the Southwest, putting enough stress on the electric grid for California to implement rolling blackouts for the first time in two decades.

The heat wave and grid pressures didn't stop at state boundaries; Nevada saw similar scorching temperatures that week in August, and similar pressures on the grid because of the above-average temperatures and smoke from California wildfires.

NV Energy took many steps to try and lower electric demand: the request for voluntary lower power use, asking large customers to cut electric use, asking large independently owned power generators within the state to help address the demand and issuing a “no touch” order on generation equipment to avoid any inadvertent interruptions.

But the state’s electric market came close to the precipice of disaster. NV Energy reported in the PUC investigatory docket that it reached the third and highest level of an Energy Emergency Alert (utility parlance for power blackouts) for several hours on the afternoon of Aug. 18.

During that afternoon at around 4 p.m., NV Energy fell short of its required operating reserves — the required contingency backup that the utility typically plans for. Twelve minutes into that hour, the company tapped into power provided by the Northwest Power Pool reserves — a grid oversight body covering power networks in eight states and two Canadian provinces.

Tapping into resources from the Northwest Power Pool was like cashing in an insurance policy — helpful to have in place for times of emergency, but evidence that something went wrong. (Again, no NV Energy customers, residential or commercial, experienced outages.)

In its filings, NV Energy said that the issue wasn’t in company-owned generation or any of the (primarily solar) PPAs — all performed between 90 to 100 percent of expected capacity. The company also said there weren’t any transmission issues with moving electrons around the grid.

Instead, the issue was with limitations on market purchases and curtailment — decisions by grid operators (largely in California) to stop the flow of electricity out of the area to ensure that adequate electricity is available in their service area.

During the week of Aug. 17, 2020, NV Energy reported that there were 76 hours (an average of 11 a day) where market purchases were curtailed, meaning the “actual delivered energy was less than the confirmed term, day ahead, or real time purchases.” The largest curtailment happened at 7 p.m. on Aug. 18, when 1,243 megawatts of purchased open market power were curtailed; the company said “NV Energy has never experienced a curtailment of that size.” Many of the curtailments occurred in real time “with little to no notice.”

Between Aug. 17 and 23, NV Energy saw more than 7,100 megawatts of purchased electricity curtailed. 72 percent of that curtailed energy were day-ahead or real-time purchases.

Those curtailments couldn’t have come at at a worse time. The above-average temperatures drove NV Energy and other power providers to rely on market purchases to keep lights on throughout the state, driving the price of a megawatt hour to obscene levels.

Electricity that the week prior had cost around $70 per megawatt hour skyrocketed amid the incredible demand — hitting a real-time peak of around $2,600 per megawatt hour on Aug. 18. That’s a more than 3,600 percent increase, or like a gallon of milk going from $2.99 one week to more than $100 a few days later.

704B issues

The docket identified another stress factor that affected the state’s grid during those hot August days — servicing many of the large businesses that had previously filed to leave utility service and work with providers on the open market.

These “704B” customers (named after the provision in state law) are some of the most well-known entities in the state: MGM Resorts, Switch, Wynn Resorts, Caesars Entertainment, Sahara Las Vegas and the Peppermill Resorts in Reno. Before state lawmakers in 2019 added new limits, those companies would generally file an application and agree to pay a seven-to-eight figure “exit fee” in return for the right to buy power (presumably cheaper) on the open market.

But those businesses aren’t totally free of NV Energy. As the balancing authority or grid operator, NV Energy still manages transmission for 704B customers, meaning they’re obligated to provide balancing services and manage the flow of electricity for those customers. The utility also acts as a provider of last resort, meaning that the customers pay a tariff (fee) to ensure that NV Energy will provide power if any of their normal providers had a disruption in service. 

That’s exactly what happened in August. Four electric providers for 704B companies failed to fulfill their obligations to their customers on the afternoon of Aug. 18, leaving some of the state’s largest casino companies to once again lean on NV Energy to keep the lights on and power running. 

The alternative power providers experienced varying levels of failure; Caesars’ shorted power supply from provider Tenaska never exceeded 10 percent, while the Peppermill in Reno had to 100 percent rely on NV Energy power for several hours on Aug. 18.

In a filing, staff for the PUC wrote that while NV Energy still provides electricity transmission service to 704B customers and is expected to make up imbalances in power supply, the level of failure to provide power well exceeded any imbalance authority and instead worked essentially as a standby service.

“This creates a riskless paradigm under which certain NRS 704B customers shift supply risk and the obligation to NV Energy and its remaining customers with little risk to the NRS 704B customers,” PUC staff attorney David Noble wrote in a filing.

Noble wrote that NV Energy was supposed to write-off the load of 704B customers once they left utility service, but “clearly that is not the case” given what happened in August. He suggested that the PUC and NV Energy in future proceedings explore ways to charge 704B customers for what essentially worked as standby service.

“If NV Energy and remaining customers are going to have to backstop some or all of these departed customer loads when the market gets tight, then NV Energy and remaining customers need to be compensated for that service, and NV Energy needs to start planning for the possibility of such events in its ... filings,” Noble wrote in the filing.

Tenaska and other alternative providers pushed back, saying that the 704B customers already pay a fee for the transmission provider (NV Energy) to backfill load in the event of “system contingency.” They wrote that the system worked as intended, and that 704B customers paid NV Energy for any electricity the utility had to provide.

During times of peak demand on Aug. 18, NV Energy was required to make up a shortfall that varied between 131 and 85 megawatts of power for transmission-only customers (the 704B companies). That amount of power diverted to those customers was smaller than the curtailment amount NV Energy was dealing with at the same time, but the utility wrote that the two issues combined had exacerbated supply issues to the near-crisis level.

“If firm purchases had been delivered and transmission customers avoided leaning on NV Energy’s resources, the shortfall would have largely been avoided,” NV Energy executive Michael Greene wrote in a filing.

Planning for next summer

Even if NV Energy was to sit on its hands and not do anything to prepare for the 2021 summer, past contracts for large-scale solar and battery resources are scheduled to be operational before summer strikes.

That includes 70 megawatts of solar energy at the Techren Solar Project near Boulder City, a 50-megawatt solar plant earmarked for an Apple data facility and a 101-megawatt solar field and 25-megawatt battery storage facility near Battle Mountain.

But even with that expanded capacity, NV Energy is still planning to rely on market purchases during summer months of 2021 to meet anticipated demand goals.

That is largely due to a change in energy supply planning for the remainder of 2021. The amended Energy Supply Plan filed in late December makes several changes, including:

  • Implementing a “hot summer” weather scenario, which estimates hotter temperatures in the summer and raises anticipated demand levels
  • Raising the utility’s planning reserve margin up to 15 percent system-wide
  • Upgrading two of four existing natural gas-fired turbines at the Lenzie Generating Station that will add an additional 37 megawatts of capacity, at a cost of $46.3 million
  • Installing a “wet compression” water injection system on two existing combustion turbines at the Higgins Generating Station for an additional 32 megawatts of capacity, at a cost of $6.5 million
  • Fulfillment of a contract with the British Columbia Hydro and Power Authority for a hydropower PPA, adding 209 megawatts of capacity over the summer

While the utility wrote in PUC filings that it doesn’t believe any policy changes are necessary to meet demand this summer, it said the above proposed changes to its energy supply plan are necessary as the current plan is “inadequate to address the potential for extreme weather power demand due to climate change and provide adequate planning reserves.”

In future planning proceedings before the PUC, the utility also suggested revisiting its formula for weather predictions and correlated demand planning. NV Energy uses a rolling 20-year average in guessing weather and demand, but said the formula doesn’t fully capture the warming trend in recent years.

PUC staff also suggested that the utility hold more frequent meetings to determine if “firmer” market purchases can be made ahead of expected hot weather, as opposed to relying on real-time or day-ahead energy markets.

Sullivan, who often testifies on clean energy issues before the Nevada Legislature and in PUC dockets, said that policymakers can take other steps to shore up grid reliability and reduce the impact of major weather events on the grid.

His group is supporting legislation in the 2021 Legislature to raise energy efficiency standards — a concept that he said reduces the demand strain on the grid by keeping indoor temperatures less variable on the weather.

Overall, Sullivan said that the best way to ensure reliability on the grid while increasing the utility’s share of renewable energy resources was diversity — solar in Southern Nevada, geothermal in Northern Nevada, and tapping into hydropower or wind energy from other states where possible.

“One of the ways to have a highly renewable, resilient, reliable, affordable energy system is to have a diversity of renewable energy resources,” he said.