Advancing technologies and shifting consumer expectations are driving changes within the utilities and public works sectors. With those changes come potential opportunities for the future of Nevada and its growing population. Recently, leaders in these industries met at the Las Vegas office of City National Bank to discuss current operations and projects on the horizon.
Connie Brennan, publisher and CEO of Nevada Business Magazine, served as moderator for this event. These monthly meetings are designed to bring leaders together to discuss issues relevant to their industries. Following is a condensed version of the roundtable discussion.
What Concerns Do You Have Regarding Utilities and Public Works in Nevada?
JOHN ENTSMINGER: My biggest concern is cybersecurity. We’ve already seen successful hacks on utilities in the Ukraine that actually managed to shut down portions of the electric grid. As we move into a future of evermore interconnectedness, I think security for our utilities and all of our infrastructure from cyber attacks is something we’re going to be spending a lot of money on and we need to remain very vigilant. Utilities are a ripe target for that sort of cyber attack.
TINA QUIGLEY: We work closely with our member entities and the state to come up with a comprehensive plan for all the roadway infrastructure and traffic management and transit in Southern Nevada. My biggest concern moving forward, as we become more reliant on using data and technology to manage all of our systems, is the collaboration that’s going to be required in terms of sharing data and leveraging each other’s technology so we’re not reinventing the wheel, or worse yet, entering into very proprietary systems that can’t share data.
DAVID BOWERS: My concern is continued funding for the public works infrastructure. We’ve done a pretty good job with the fuel revenue index. It’s helped us at a local level. The federal portion is really uncertain at this time. There’s been talk that it’s going to be a bright picture and you want the trillion dollar budget, but we just haven’t seen that. There’s some fears there. Obviously we’re growing at a fast pace in Las Vegas and if we’re going to continue to see great roadway improvements, it’s going to take money.
RUDY MALFABON: To be specific, when Congress passes a long-term funding plan for transportation in America, it’s a multi-year bill. With this current one, in 2020 there’s a big cut planned because they don’t take enough in on the federal gas tax to fund transportation. Right now, we love the fact that they passed the long-term bill, but we’re concerned because we thought they’d address that shortfall in 2020, that’s coming pretty soon. It would be a huge cut for the state, which transfers money to the MPOs (metropolitan planning organizations) like RTC (Regional Transportation Commission). That’s going to really hurt us. They continue to not address the issue in Congress with the federal funding. The fact is, the federal gas tax can’t keep up with the spending levels they authorize.
How Has the Marketplace Changed?
DOUG CANNON: The challenge that we face is the ever-changing consumer. We actually plan now at the neighborhood level, the individual circuit level, because consumers aren’t looking at big power plants anymore. Consumers are looking at putting generation assets on their own rooftop and putting battery storage in their garage instead of using the entire electric grid. We may not need that big generation plan anymore. We may need to strategically look at what neighborhoods need more solar panels on roofs so we can support the grid and provide voltage support and the services that customers need. It’s making people think way out of the box, but it’s good.
TOM HUSTED: Distributed energy resources are no longer a question of if they’re going to be affordable. They are affordable. So, it’s a matter of [consumers] and us taking a different position in the future that we’re extremely excited about. This vertically integrated industry is changing very rapidly. Now, we’re going to be a conductor of an orchestra where we’re managing resources for the consumer. We’ll facilitate the distribution and the management of an energy system in coordination and conjunction with the end-use consumer. That is exciting because the consumer is going to be our first choice for power supply in the future.
JOSE ESPARZA: As a natural gas company, a customer needs water to their home, they need electricity, but they don’t necessarily need us. We understand that. So we have to provide, not only safe and reliable service, but we also have to give them the type of service and the customer-centric service they’re looking for. Amazon and Uber have changed the game. As a utility industry, we need to keep up with that and we need to continue to offer tools where they can interact with us on a 24/7 basis and interact in such a way where they see fit in today’s day and age.
TIM OUDMAN: I think education, in general, about operations and the positive impact they have on the community is something for consideration. All these operations are very complex and they’re sometimes misunderstood. I’ll give you an example specific to Republic. We get a lot of non-recyclable material that people put in the recycling cart, so that just contaminates the good recyclables. Determining how best to effectively communicate with our customers, it’s an ongoing and ever-evolving process around education.
Do Consumers Have a Choice When It Comes to Energy?
CANNON: You have a choice in where you get your energy, to go out and put solar panels on your roof to generate all or part of your own electric needs. Customers can go even further by installing batteries. Batteries aren’t quite at the price point where we’re going to see large scale consumer adoption, but we’ve seen significant reduction in the cost of solar panels. I suspect over time we’ll see similar reductions as the technology is embraced. That will be another tool that a consumer can choose, a battery to charge during low cost time periods, discharge during periods where energy might be more expensive and essentially have control over what their ultimate bill is. Does it make sense to have multiple competing power grids in one location and multiple wires? It’s like multiple entities having roads going to the same places. I’m not sure that’s an effective use of the public’s funds. But, having choice about where the actual electrons come from, I absolutely think customers have choice today.
HUSTED: We don’t believe consumers have a choice today. The vast majority of consumers don’t have the ability to utilize solar, to utilize batteries and use other DER (distributed energy resources). Will they in the future? Absolutely. We believe that the consumer needs to have choice. That’s what’s going to allow us to continue to evolve this industry and obtain efficiencies that we simply don’t have now. One of the biggest impediments is the various differences between the modeling of the companies that provide these services.
How is Technology Influencing Your Business Model?
QUIGLEY: There’s only so much asphalt and green time you can have in certain corridors before you’re going to reach congestion. The only way we can start to see a difference is through the application of technology and new ways of managing that traffic. We’ll have to look at human behavior as well and figure out how we encourage technology and public partnerships so we’re creating systems that get people out of cars. I like to talk about the concept of micro-transit. When you think of transit, you think of a bus that stops every quarter of a mile along a fixed route. With these new logistics and the new algorithms that technology companies are developing, we could get to a point where we can create a very customized route to get from where they live to where they work.
BOWERS: We’re not sure what the future holds as far as autonomous vehicles. Some people say it’s really going to reduce the amount of traffic because cars are going to be able to travel faster. You’re not going to have the signal stops because the signals are going to be smarter. At the same time, you’re going to have a lot of new passengers. Theoretically, you could put your 12 year old in an autonomous vehicle and get them to the soccer game or you might go to the airport and have your car drive back to your house. There’s a lot of questions about whether that is going to be a positive or negative effect, but we definitely know the current model is not going to work going forward over a long period of time.
HUSTED: The same applied science is happening in our industry. You go to the Consumer Electronics Show and see all those gadgets that are waiting to talk to us. We come from an industry in which we’ve got an intangible product. It’s hard to manage. All of that is changing. Right along with transportation, we’re seeing a merging of these technologies that changed the industry. The driver is the human desire to get to those points to allow us to be able to manage transportation and energy use in a different manner.
What Projects or Capital Improvements are in the Works?
QUIGLEY: We’re one of the only metropolitan areas in the U.S. that does not have any type of light rail or, what we’re calling now, “next gen transit”. [That type of transit has] the ability to move within the appropriate corridors where you’ve got a lot of urban density, potential for economic development and connectivity to your airport or major economic destinations. Yet, we’re also one of the fastest growing regions. I am a big believer that there are certain corridors where next gen transit is going to be very appropriate. We’re doing a large outreach effort to the community to learn where they think it’s most appropriate that we invest dollars for the purpose of moving people. The corridor that we will be taking a very strong look at is one that’s actually already underway and that’s Maryland Parkway. We’re also taking a look at the resort corridor and partnering with the resorts themselves on how we are going to move people from the airport to the Strip, convention center and downtown.
CANNON: We’re really focused right now on renewable energy development. One [renewable project] has already been commissioned and another one will be commissioned very shortly. It’s 179 megawatts of electricity, photovoltaic solar. This is being installed out in the Apex area. In addition, we’ve got two projects down in the El Dorado Valley. We call them Boulder Solar 1 and Boulder Solar 2. That’s another 150 megawatts. Then we have another 100 megawatt solar project that’s out a couple years, but that process is starting. We have seen tremendous opportunities in solar.
BOWERS: You have seen downtown [Las Vegas] transform from a narrow sidewalk, large asphalt travel way to wider sidewalks with bike paths and narrower roadways while still conveying nearly the same amount of traffic. It’s really a new focus on allowing pedestrians, bicycles and higher order transit. We’re trying to get people out of the vehicles, allow them to walk or ride their bikes because it’s healthier. It’s taking congestion off the roadways. A big project we have coming in the near future is Las Vegas Boulevard. We’ll be picking it up from Sahara to Washington, so it’s a big stretch. It’s one of the main corridors that has a lot of business and room for growth, but very narrow sidewalks and wide traffic lanes. We’re looking forward to that one.
ESPARZA: We plan, over the next three years, to spend about $1.7 billion throughout our service territory in the southwest. We’ll be replacing and upgrading several miles of pipeline here in the Las Vegas Valley area. We’ll be installing new pipe to keep up with the growth, which we’re really excited about. We’ll be expanding outside of our traditional service territory to Mesquite, Pahrump and Spring Creek in Nevada. We’ll take one at a time to help spur economic development in these areas. Finally, we’re doing an 8.4 mile project up in Northern Nevada as well. We’re very bullish on growth.
MALFABON: We’ve been concentrated on eliminating some of the bottlenecks. We’re also going to have to do a lot more with Caltrans (California Department of Transportation) with looking at the I-15 corridor. It’s one of the things that Mayor Goodman has really been focused on. There’s a lot of opportunity for collaboration. Even removing some of the bottlenecks in the Valley is really working with Henderson, Las Vegas, RTC, the various entities down here. We’re very good at teaming up and pooling our funds in a systematic phased approach. On I-11, Arizona gave us a good overview of what they’re doing, eventually building that in phases. It’s one of the things where we’re looking at the entire state and developing a long-range transportation plan that will look at different corridors, not just I-11, but other freight corridors that are needed to be expanded in a phased approach.
OUDMAN: Over the next 12 months or so, we’ll spend about $30 million more on finishing off our new recycling program. Sitting here about this time next year, the whole Valley will be converted to the new program. So we get all [recyclables] to the recycling center, then we sort it from there. We probably have about one third of the Valley to go.
ENTSMINGER: Our biggest project by far is our new low lake level pumping station. That’s a $650 million project that we’re slated to bring on line the first quarter of 2020. The importance of that is it gives us the ability to pump water out of Lake Mead regardless of where the lake level goes because our pumps will be submerged below the point where the Bureau of Reclamation can no longer release water from behind Hoover Dam. We’ll have secure water delivery infrastructure even if the federal government can’t deliver water to Phoenix and Los Angeles. That puts us in a very enviable position.
HUSTED: In a gambling state, who would have bet that Beatty was going to be the first all fiber optic community in the state? It’s one of the communities that we serve and we’re building fiber optics to every home and business within our service area. That’s the first phase of a $100 million project. It’s ongoing right now and will be completed in 2018. We’re taking that same blueprint and partnered with Switch, CC Comm, etc., in building an all-fiber network that goes from Arizona all the way to Oregon. We believe that’s the future for the state of Nevada, taking advantage of the opportunity and building another leg on the economic stool, which is technology.
Water System Renewal Initiative Under Way
Earlier this year, the Clark County Board of Commissioners—serving in its dual role as the LVVWD’s Board of Directors—adopted a 10-year capital improvement plan for the not-for-profit water utility, which serves all of Las Vegas and unincorporated portions of Clark County. Although the LVVWD’s water delivery system is currently rated among the nation’s most efficient, with a main break rate eight times lower than the national average, a citizen’s advisory committee recommended proactively reinvesting in the vast network to maintain its reliability and prevent expensive emergency repairs. The LVVWD’s system includes approximately 6,500 linear miles of water mains and service lines, nearly a billion gallons of reservoir storage, and enough pumps to move more than a million gallons of water per minute around the valley. In 2016, the LVVWD delivered more than 110 billion gallons of water to nearly 400,000 residential and business customers.
“Water infrastructure is largely invisible,” explained LVVWD Infrastructure Management Director Greg Kodweis, who has been working in the water industry for more than two decades. “You turn on the faucet, and water comes out. People don’t really think about what goes into making that happen until something breaks; at that point, it becomes an emergency. Our goal is to prevent that from happening and make water service something you don’t have to think about.”
To minimize service interruptions, the LVVWD’s Infrastructure Management department continually evaluates the condition of the system, which is comprised of millions of individual pipeline segments, valves, meters and other components. Each of these components has a finite service life; while large-diameter pipelines may hold up for decades, meters may last fewer than 10 years. The key, Kodweis said, is to stay on top of maintenance and know when it’s time to replace parts.
“It’s kind of like maintaining a car. If you don’t change the oil and replace the tires periodically, you’ll end up on the side of the road,” Kodweis said. “We use sophisticated software to identify potential issues of concern and prioritize rehabilitation and replacement projects. This technology allows us to get the most of our facilities while minimizing costly emergency repairs.”
For instance, the LVVWD uses a water pressure monitoring system to optimize operations and maximize the life of pipelines, while a high-tech acoustic monitoring system “listens” for leaks and alerts the utility if they occur. Last year, the LVVWD installed and inspected approximately 55 linear miles of water pipe. One upcoming project calls for the replacement of an older subdivision’s water delivery system—including water mains, service laterals and even fire hydrants—to bring it up to par with newer parts of the community.
In total, the LVVWD plans to invest more than $600 million during the next decade, with about two-thirds of those funds targeting repair and replacement projects to benefit existing customers. The balance is divided between new facilities to serve growing portions of the valley and a state-mandated water quality protection initiative. For more information, visit lvvwd.com.
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