Question 3 Nevada: A Nevada Constitutional Amendment on Energy

One of the questions on this November’s ballot, Question 3, will address energy in Nevada. A proposed constitutional amendment, the question must be approved in two consecutive election years. Having passed in 2016, this is the second time it’s appeared on the ballot.

The question reads: “Shall Article 1 of the Nevada Constitution be amended to require the Legislature to provide by law for the establishment of an open, competitive retail electric energy market that prohibits the granting of monopolies and exclusive franchises for the generation of electricity?”

Nevada Business Magazine asked both sides to state why they oppose or support Question 3. The responses follow.

Why do you oppose Question 3?

by the Coalition to Defeat Question 3

Question 3 is a constitutional amendment on this November’s statewide ballot that would raise our electricity rates, eliminate consumer protections, and lock a risky experiment into our state constitution. The deeply flawed ballot measure would force Nevada to dismantle its current regulated electricity system – one of the most reliable and affordable in the nation – and replace it with a new, unknown system established by the legislature and the courts.

The reality is we do not know what we are voting on with the extremely vague wording of this ballot measure. The proponents have not provided any details or instructions on how Nevada’s new electricity system would be set up or function.

Because Question 3 contains ambiguous and contradictory language, it would spark significant legal challenges and court battles over its implementation. This uncertainty would slow investments into Nevada’s energy infrastructure, hurting economic development and jeopardizing thousands of good-paying jobs.

Question 3 would also make Nevada the first and only state to deregulate its electricity system through a constitutional amendment, locking this risky experiment into Nevada’s Constitution. When things go wrong, it would take at least four years and multiple legislative sessions to repeal it from our state constitution.

Many states¹ – including Nevada in the late 1990s – tried unsuccessfully to deregulate their electricity systems. It resulted in significantly higher electricity prices, less reliable service, rolling blackouts, spikes in customer complaints, and predatory marketing scams that target seniors and consumers on low and fixed incomes.

Question 3 would cost Nevada consumers billions. According to the Public Utilities Commission of Nevada (PUCN)² dismantling our existing electricity system would cost consumers at least $4 billion. That’s because the state’s major energy provider, NV Energy, would be forced to divest its generating facilities and power plants. Nevada ratepayers would remain liable for any financial losses incurred for these stranded costs.

The PUCN also found that implementation of Question 3 would result in upwards of $100 million in new start-up costs, and more than $45 million in new annual operating and maintenance costs, money that would come directly out of the pockets of residential customers and small businesses in the form of higher electricity rates and higher taxes.

For example, residential customers in southern Nevada could see a monthly increase of up to $28, and some northern Nevada commercial customers facing a nearly $370 per month increase for at least a decade.

Today, Nevada’s average electricity rates are already lower than all 14 deregulated states. In fact, in those deregulated states, average residential electricity rates are 30% higher than Nevada’s.

Question 3 would damage Nevada’s renewable energy sector³ and would eliminate Nevada’s current rooftop solar program.

If passed, Question 3 would eliminate Nevada’s existing rooftop solar program. Both the PUCN and the Guinn Center⁴ found there are no guarantees that rooftop solar customers would continue to receive favorable net-metering rates for electricity returned to the grid under Question 3.

Question 3 would also cancel an unprecedented plan to double renewable energy production in Nevada by 2023. Question 3 would shut down six new solar projects that would create more than 1,700 construction jobs and generate 1001 megawatts of renewable energy. That’s enough new clean energy to power 600,000 Nevada homes.

There are many reasons why it’s been nearly 20 years since any state has taken the risk of implementing a system like the one Question 3 proposes. We are urging all Nevadans to look carefully into the facts and vote No on Question 3.

Why do you support Question 3?

by Yes on Question 3

Warren Buffett, the owner of NV Energy, once said that, “Energy deregulation will be the largest transfer of wealth in history.”⁵ That was before he said owning utilities isn’t “a way to get rich, it’s a way to stay rich.”⁶ And while energy choice is most accurately referred to as restructuring (deregulation implies the absence of regulation), is it any wonder why NV Energy is spending $30 million to protect their monopoly?

Lower power bills, more renewable energy and more jobs. All will come to Nevada upon passage of the Energy Choice Initiative in November, otherwise known as Question 3.

Question 3 is a constitutional measure that very simply does two things. First, it bans the electric generation monopoly in Nevada and second, it requires the legislature to provide for an open, competitive electricity market by July 1, 2023.

Competition simply lowers prices, even in energy markets. According to data from the Energy Information Administration, the 14 energy choice jurisdictions in which almost one-third of Americans live saw prices fall 14 percent between 2008 and 2015 while monopoly states’ prices rose 5 percent in that same time frame.⁷ A study presented before the Governor’s Committee on Energy Choice found Nevada ratepayers would see a net benefit of more than $1.1 billion by 2023.⁸ That equates to savings of $11.16 a month on bills before competitive pricing is even included.

The chairman of the Illinois Commerce Commission estimates that consumers in energy choice states have saved $324 billion dollars on their power bills from 2008 to 2017 as a result of competition.⁹ According to a 2016 study from Cleveland State University, energy choice saved consumers in Ohio an average of $3 billion per year, for a total of $15 billion over five years.¹⁰ In Pennsylvania, according to a study from the University of Pennsylvania, energy competition saved residential customers $818 million in 2016 alone.¹¹ Warren Buffett was right: energy competition is a huge transfer of wealth from the monopoly to us.

Having the option to choose your energy provider means choosing the type of plan that works best for you. Want 100 percent renewable energy? There will be plans available for that, just as there are in other jurisdictions around the country. According to a study from the University of Pennsylvania, renewable energy plans were ‘the most widely offered innovative product’ available to residential customers following energy restructuring ‘by far’.¹²

At its core, the Energy Choice Initiative is about unleashing Nevada’s renewable energy potential. Consumers will drive the new market and because consumers are demanding renewable energy, that will spur the demand for building those projects right here in Nevada. Consider the data center provider Switch, one of the primary backers of Question 3 and a company who has already exited NV Energy. They have announced they are building 1,000 megawatts of solar energy at a 50 percent discount than what you would have to pay NV Energy to get 100 percent renewable energy today. Other major companies like MGM, Wynn and Caesars have also left NV Energy and have announced solar projects of their own to power their businesses at major savings over the current monopoly utility. Bill Ellard, the chair of economics for the American Solar Energy Society, said, “The utilities are not negative on solar, they are negative on you controlling your own electricity.”

A study done by Nevada-based economist John Restrepo found that because of the demand for building more renewables, Nevada could see an increase of up to 34,080 new clean energy jobs by 2033 as a result of passing Question 3, more than doubling Nevada’s current job total in that sector.¹³

In November, vote Yes on Question 3 for lower bills, more renewable energy and more jobs.

Sources

1. Are Consumers Benefiting from Competition?: An Analysis of the Individual Residential Electric Supply Market in Massachusetts by Massachusetts Attorney General’s Office, March 2018; Electricity Prices Expected to Skyrocket this Summer by L.M. Sixel, Houston Chronicle, June 11, 2018; Regulators Blast Electricity Providers for Deception by L.M. Sixel, Houston Chronicle, June 28, 2018; Regulators Seek Default Pricing on Monthly Utility Bills by Jeffrey Tomich, E & E News, Illinois, July 5, 2018
2. Energy Choice Initiative Final Report by Public Utilities Commission of Nevada, April 2018
3. Clean Energy Advocates Oppose Nevada Ballot Question 3, Sierra Club Press Release, July 26, 2018
4. Restructuring the Electricity Market in Nevada?: Possibilities, Prospects and Pitfalls by the Guinn Center, 2018
5.  “AZQuotes.com”, Accessed 7/27/2018
6. Who Owns the Sun? by Noah Buhayar, Bloomberg Businessweek, January 28, 2016
7. Electricity Customer Choice Outperforms Traditional Monopoly by Wayne Kuipers and Laura Chappelle, UtilityDive.com, August 23, 2016
8. Conflicting Reports Underline Tough Path for Preparing for Energy Choice Ballot Question by Riley Snyder, Nevada Independent, May 10, 2018
9. Coalition Fights for Energy Choice in Florida by Alex Crees, Choose Energy, January 12, 2018
10. Electricity Choice in Ohio: How Competition has Outperformed Traditional Monopoly Regulation, Cleveland State University, November 2016
11. A Case Study of Electric Competition Results in Pennsylvania, University of Pennsylvania, October 28, 2016
12.  A Case Study of Electric Competition Results in Pennsylvania, University of Pennsylvania, October 28, 2016
13.  Job Analysis & Forecast: Yes on Question 3 by RCG Economics, October 2016