Lawmakers nearing deal on major bill expanding NV Energy’s in-state generation
Following numerous summers of rolling blackouts across the West, Nevada’s power supply, relationship with other state energy markets and system reliability have come under increased scrutiny, especially in the face of rising energy costs.
Against that backdrop, NV Energy — the state’s primary electric utility — is pushing for a measure this legislative session with the broad goal of expanding its energy independence through a massive build-out of power plants and other energy-generating resources.
The company is involved in consequential negotiations with environmental groups and large energy customers (including members of the Nevada Resort Association) to hammer out a deal to ramp up in-state energy generation resources. Those negotiations are aimed at reducing the state’s reliance on the western energy market, ensuring the company can meet peak demand during increasingly hot summers and helping achieve renewable energy standards.
But with less than two weeks until sine die, the late-session energy bill has still not been introduced. Though specific details are still being hashed out, here’s what The Nevada Independent knows about the proposed legislation, based on conversations with sources involved in the negotiations who were granted anonymity so they could speak freely about the ongoing negotiations.
Driving the desire to increase in-state energy generation are problems affecting the broader western power grid. At key junctures in each of the last three summers, the utility has called on customers to raise thermostats, avoid running appliances and turn off their pool pumps at the hottest parts of the day — a last-minute emergency valve meant to dodge rolling blackouts.
With its existing generating resources, NV Energy can produce more than 6,000 megawatts of electricity, but peak demand can reach as high as 9,000 megawatts. The company also experiences additional demand driven by customers that typically get power elsewhere, such as large resorts and rural electric providers who still contract with the utility as a provider of last resort.
For NV Energy, drawing energy from the western market has become costlier and less reliable as multiple states compete for resources generated across the West — which is why the company is seeking bill language that will make it easier to start developing in-state generation.
But negotiators are still seeking common ground on what percentage of the new generating resources should come from renewable forms of energy, such as solar and geothermal. Tension comes from a delicate balance between the desire for a greater focus on renewable energy generation and building out energy storage (especially given the long life of natural gas and other carbon fuel-powered generating stations), while the utility is seeking flexibility to use more stable fossil fuels given the intermittent nature of solar and other renewable energies.
Assemblyman Howard Watts (D-Las Vegas), chair of the Assembly Natural Resources Committee, is working on the legislation and submitted a bill draft request in February centered on “provisions governing energy.”
“At the end of the day, high level, everyone wants reliability. Everyone wants affordability. People want clean energy,” Watts told The Nevada Independent on Monday.
He said the legislation has long been in the works because it was vital to figure out a compromise and have “honest conversations” with everyone involved, from environmentalists to the energy company itself.
“The role that I play as a legislator is to … take in all of that information, and then figure out what I think is going to be the best public policy for the state,” Watts said. “Not on behalf of any one entity. But for everybody overall.”
Watts added that, ultimately, the bill does not address high costs facing ratepayers. He said consumers may have a tough time with rate costs associated with some of the proposals, but they’re vital to provide stability and resilience for utility ratepayers moving forward.
NV Energy is also pushing for the bill to take advantage of energy-related tax credits offered by the federal government through the federal Inflation Reduction Act. But those credits are, for the most part, only available until 2032. By expanding its portfolio of energy resources, NV Energy also hopes to meet the energy production threshold necessary to join a regional transmission organization, which the company is mandated to join by 2030.
Regional transmission organizations (RTO), also called Independent System Operators (ISO), function as platforms that facilitate the sharing of resources — power markets and transmission — across geographical areas, typically across multiple states. The idea is that, by pooling resources, energy costs go down and resources can be dispatched in a more efficient manner. Though popular in the East and Midwest, Nevada and many other western states are not members of an RTO or ISO.
Other key factors at play include efforts to expand transmission lines to other regional energy sources, such as a direct line to hydroelectric power in the Pacific Northwest, which could help address peak energy demand during the summer. Ideally, NV Energy could transfer solar energy to the Pacific Northwest and receive hydroelectric energy from that region on an as-needed basis. Separately, NV Energy is facing pushback on its massive in-state transmission expansion, the multibillion-dollar Greenlink project, from a watchdog group concerned the project development will lead to higher costs for consumers.
Also central to ongoing negotiations is the function of the state’s Integrated Resource Planning (IRP) process, an expansive, data-heavy planning process by which NV Energy submits plans for new energy generation to the Public Utilities Commission of Nevada (PUCN) every three years.
The company last completed the process in 2021 and will submit its next Integrated Resource Plan in 2024 (and has submitted several amendments in the meantime). However, some stakeholders are seeking changes to that process that would allow for more transparency through negotiations on the bill. That includes changes to the amendment process, which has allowed NV Energy to pursue major projects, such as the natural gas plant approved in March, outside the normal IRP process.
The measure stems in part from a call Gov. Joe Lombardo made in his State of the State address to increase Nevada’s energy resilience and an executive order he issued in March aimed at fulfilling that pledge. The executive order embraces natural gas as part of the state’s energy generation plan and calls for a review of Nevada’s strategy to fight climate change.
“With California retiring its units and changing its transmission rules, we have no choice but to reduce our reliance on the market and seek energy independence for all Nevadans,” Lombardo said in January.
The proposal comes as energy generation and climate change have become increasingly politically stratified on the campaign trail, in particular as a proxy for debates over a more ambitious transition to renewable energies — usually championed by Democrats — and the push for a continued reliance on cheaper natural gas — usually backed by Republicans.
Though natural gas remains a key component of the company’s energy generation goals, with regulators approving in March the company’s plan to build a new natural gas-fired power plant in Southern Nevada, NV Energy continues to pursue a transition to an energy future reliant on renewable energy.
Under the state constitution and state law, there are renewable energy portfolio standards for electricity sales that the company must reach over the next several decades, including 50 percent renewable energy by 2030 and 100 percent renewable by 2050. The company exceeded minimum goals in 2022, meeting a renewable portfolio standard of nearly 37 percent.