Solar deregulation battle heats up in Nev.

Source: Benjamin Storrow, E&E reporter • Posted: Tuesday, October 25, 2016

Few voters have a taste for lengthy debates over utility regulation. Nevadans are different.

Last year, a fierce battle over rooftop solar engulfed the state. When regulators unanimously decided to do away with the retail rate doled out to residential producers, even celebrities like Mark Ruffalo joined the clamor of protests at the Nevada Public Utilities Commission to denounce the ruling.

Now, some solar supporters are channeling their frustration into a ballot measure supported by several of the state’s largest companies. The proposal would deregulate Nevada’s electric grid, enshrining a competitive retail power market in the state’s constitution.

That suits some of the state’s largest electricity consumers, who believe they can get cheaper rates on the open market. NV Energy, a Berkshire Hathaway subsidiary with 1.2 million customers in the state, now provides the vast majority of Nevada’s electricity.

But it has also attracted support from solar advocates who believe the state’s power market is broken. NV Energy, they note, has been an outspoken foe of rooftop solar. They maintain that an open market would spur competition and innovation, quickening the pace of solar adoption.

“The current solar rules aren’t working,” said Chandler Sherman, deputy campaign director for the Bring Back Solar Alliance, a political action committee supported by SolarCity Corp. “Restructuring the market will allow for the innovative new energy sources we want to embrace.”

The alliance announced Friday that it is supporting the initiative.

But other supporters of rooftop panels aren’t so sure. Moving to a deregulated market leaves consumers susceptible to energy price spikes, said Tyson Slocum, director of the energy program at Public Citizen, a Washington D.C.-based consumers group.

He called deregulation “a dramatic response” to utilities entrenched in opposition to rooftop solar.

“You can have distributed generation without deregulating the market,” Slocum said. “It isn’t this all-or-nothing choice.”

Something for everyone, or just bigger bills?

The ballot measure is the latest chapter in a long-standing debate over deregulation. Nevada lawmakers looked into restructuring their electricity market around 2000, but ultimately dropped the idea following the California energy crisis.

Today, cheap natural gas prices once again make the wholesale electric market attractive for large power consumers, said Severin Borenstein, an economics professor at the University of California’s Haas School of Business.

But that could change if gas prices were to rise again, he said. Residential rate increases in deregulated markets outpaced their regulated counterparts by 50 percent between 1997 and 2007, when gas prices were on the rise, according to a 2015 study co-authored by Borenstein. That trend reversed itself in recent years when gas prices fell.

In Nevada, the deregulation push has created odd political bedfellows. Sheldon Adelson, the billionaire owner of the Las Vegas Sands Corp. and a prominent Republican fundraiser, and Senate Minority Leader Harry Reid (D) are both supportive; the AFL-CIO is opposed. NV Energy is officially neutral, though it did release a paper arguing any new entrants to the Silver State should be held to the same standards as the incumbent utility.

The Sands, MGM Resorts International, Wynn Resorts Ltd. and the Las Vegas-based data storage firm Switch are the main force behind the ballot measure. They object to a state law that requires them to pay an exit fee for leaving the NV Energy system.

All have sought to leave NV Energy in recent years, but only MGM agreed to pay the exit fee imposed by state regulators. The others have balked, and Switch is suing the commission over its fee.

The proposal’s backers see something for everyone in the measure. Large consumers get cheaper power while residential customers get quicker solar adoption, they say.

“I think we got to this point because of the inability of the traditional regulatory structure to provide what people were looking for, both at the residential level and the industrial level,” said Lucas Foletta, a lawyer who helped draft the proposal on behalf of the group behind the initiative, Nevadans for Clean Energy Choices.

Opponents see the potential for price spikes and express worry the measure will be difficult to amend once incorporated in the state constitution. As a constitutional amendment, voters will have to pass the proposal a second time for it to go into effect.

Danny Thompson, executive secretary treasurer for the Nevada AFL-CIO, calls the plan a “dumb idea.” He claims it won’t even meet its own clean energy aims because out-of-state utilities might not be subject to Nevada’s renewable portfolio standard.

But what the proposal would mean for rooftop solar remains an open question. Advocates of the ballot measure say deregulated states have witnessed a greater degree of solar adoption. Rooftop solar producers would also have more options to sell their excess power, they say.

Others are doubtful. Borenstein said buyers are unlikely to want to pay more than the wholesale rate for rooftop power.

“I don’t see how that would help rooftop solar at all,” he said. “It would give customers more choices other than rooftop solar.”