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Presented by Michael Saunders, Senior Deputy Attorney General
Disclaimer: The views presented are those of the presenter, not necessarily those of the Nevada Attorney General’s Office or the Bureau of Consumer Protection.
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Introduction:
I will be presenting some facts and concerns with respect to Nevada electric rates with an eye toward the panel topic of renewable energy.
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Concern: Electric Rates In Nevada Are High Relative to other Mountain States.
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Nevada has the highest electric rates among the US Mountain States.
Dec. 2010 Average Residential Electricity Rates Mountain States
Cents per kWh
(Source: Energy Information Administration)
9.66 10.01 10.26
7.738.94
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9.718.23 8.39
0
2
4
6
8
10
12
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Mountain Arizona Colorado Idaho Montana Nevada New Mexico Utah Wyoming
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But, at least we are not California. Dec. 2010 Average Residential Electricity Rates Pacific Contiguous
Cents per kWh
(Source: Energy Information Administration)
11.72
14.43
8.718.06
0
2
4
6
8
10
12
14
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Pacific Contiguous California Oregon Washington
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Natural Gas Rate Perspective Since about 70% of power provided for
customers by NV Energy comes from natural gas, low natural gas prices have been a blessing from a rate perspective.
Natural gas is inexpensive relative to renewable forms of generation.
Due to shale gas, natural gas supply is abundant.
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Est. Levelized Cost of New Generation in 2009$/MWh. (EIA, Annual Energy Outlook 2011).
0
50
100
150
200
250
300
350Transmission Investment
Variable O&M
Fixed O&M
Levelized Capital Cost
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Natural Gas Forward Price Curves
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Fact: Drowning in Power Load is expected to remain flat at least until 2018.
Long on power at least until 2018.
Self-Generation Capacity (2010 Peak)
NVE-S 80%
NVE-N 94% Owned generation 12/31/05
2,491 MWs Owned generation Mid-2011
6,012 MWs % increase from ‘05 to ’11 = 141%
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2011 2012 2013 2014 2015 2016 2017 2018
Long Position 0 223 269 6 29 0 0 0
Open Position -27 0 0 0 0 -22 -70 -215
-300
-200
-100
0
100
200
300
MW
Nevada Power Long and Open Positions 2011-2018 (Loads & Resources Table, pg. 82, Docket No. 11-03014)
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3762
3957
4388 4324
4591
4781
4944
5234
5568
5657 5724
5485 5488 5503 5466 5447 5500 5537
5582 5625
3000
3500
4000
4500
5000
5500
6000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
LO
AD
YEAR
NEVADA POWER LOAD FORECAST
Historical 1st Amendment Docket 11-03014
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Concern: Many factors are and will be placing upward pressure on rates.
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Harry Allen 500MW (nominally rated) natural gas
combined cycle electric generating plant
$682 million approved cost (excluding AFUDC)
Plant will be included in next general rate case filed in June 2011
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Lost Sales Revenue Recovery Law passed in 2009 that allows NV Energy to
recover “an amount based on the measurable and verifiable effects” of energy efficiency and conservation programs. NRS 704.785.
NV Energy has a Lost Sales revenue recovery request pending a decision from the PUCN.
4.94% proposed increase Nevada Power
2.79% proposed increase Sierra Pacific
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Smart Meters (ASD) $300 million total project cost
$139 million American Recovery & Reinvestment Act grant
1.45 million smart meters installed by 2012
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ON Line Transmission Line Approx. $500 million total cost
500kV 235 mile interconnection
Expected in service date late 2012
95% of cost allocated to Nevada Power
5% of cost allocated to Sierra Pacific
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Renewable Generations Subsidies
Program offers rebates to customers for installing solar, wind, and waterpower systems on homes, small businesses, public buildings or schools. NRS 701B.
Funded by ratepayers
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RPS ratcheting up Portfolio Standard based on kWh sales
15% in 2011-2012
18% in 2013-2014
20% in 2015-2019
22% in 2020-2024
25% in 2025
Solar 5% to 6% beginning in 2016
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RPS driving costs “The Company’s obligation to procure
renewable energy pursuant to Nevada’s Renewable Portfolio Standard also continues to increase even though the Company’s forecasted energy sales are declining. Investments are necessary to keep pace with the RPS.” (NV Energy Reply Comments, Docket No. 10-12007 pg. 2). (emphasis added).
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RPS driving costs While the need for incremental generation can be
satisfied with the existing generation fleet (including the Harry Allen CC) through the Action Plan period, the need to invest in demand side management, renewable resources and transmission infrastructure cannot be deferred. This is because even though loads are flat, Nevada Power is subject to state laws requiring that it increase the quantity of renewable energy resources that are used to serve customers.” -Michael Yackira, CEO NV Energy, Testimony Docket No. 10-02009. (emphasis added).
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Ultimate Concern: Load is expected to remain flat and NV Energy is long
on power, yet the RPS requires NV Energy to add renewables.
Concern: cost-effective natural gas generating capacity may be displaced by more expensive renewables in order to facilitate RPS compliance
at a time when ratepayers are struggling economically
and when there are several factors placing upward pressure on already high electric rates.
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Conclusion: Reasonable policies should be adopted
and executed in order to prevent utility rates from being driven so high that rates become unreasonable burdens on residential and business ratepayers.
