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Nevada to vote on ending utility monopoly, reaching 50% renewable standard

Nevada voters will decide Nov. 6 whether to change the state constitution to establish a competitive energy market in place of NV Energy Inc.'s long-standing monopoly. A second ballot measure would require electricity sellers to obtain at least 50% of their power from renewable sources by 2030.

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Early voting began Oct. 20, and more than 127,000 of the state's 1.56 million registered voters cast their ballots in person or by mail in the first three days.

Question 3, the Energy Choice Initiative, would allow customers to buy electricity from their choice of suppliers or generate their own power instead of having to buy electricity from NV Energy's utility subsidiaries. Right now, only large customers can seek alternative suppliers, providing they get permission from the Public Utilities Commission and pay the utilities substantial exit charges as compensation for stranded costs.

The Question 3 initiative is largely the product of data-center owner and developer Switch Inc. and its founder and CEO, Rob Roy, who formed an alliance with Las Vegas gaming companies to bankroll the "Yes on 3" campaign. Seeking to choose their own energy suppliers, Switch and the casinos have been forced to pay the utility millions of dollars in exit charges. Neither NV Energy nor PUC representatives would comment on what becomes of these exit fees if the Energy Choice initiative passes.

NV Energy has spent heavily on a campaign to defeat the Energy Choice Initiative, with cash contributions since Jan. 1 of $62.29 million, including $49.9 million since June 13, and more than $800,000 of in-kind contributions to the Coalition to Defeat Question 3, according an Oct. 16 report to the Nevada Secretary of State's office.

The utility's spending eclipsed the $32.77 million plus $150,000 of in-kind contributions the data and casino companies gave to Nevadans for Affordable, Clean Energy Choices PAC, which supports the measure, according to an Oct. 16 report filed with the Secretary of State. Conservative megadonor and billionaire Chairman and CEO Sheldon Adelson's Las Vegas Sands Corp. has contributed $13.37 million, and Switch has contributed $10.9 million.

Some press accounts liken the costly referendum campaign to a "battle of the billionaires," with Adelson facing off against investor Warren Buffett, who heads NV Energy parent Berkshire Hathaway Energy and multinational conglomerate Berkshire Hathaway Inc.

Support is slipping

More than 72% of the voters approved the first of two required votes on the Energy Choice Initiative in 2016. This time around, support on the second ballot appears to be diminishing. Not only has the state's major utility thrown its weight against the initiative, but some environmental groups have questioned whether the promised benefits of green energy will be realized if customers are free to choose cheaper energy supplies. The Natural Resources Defense Council, the Sierra Club, Southwest Energy Efficiency Project, and Western Resource Advocates announced their opposition to Question 3 on July 26, saying deregulating the state's electricity market could disrupt the state's progress toward a clean energy future.

The Energy Choice Initiative was sold to voters as a green energy issue, but the environmental groups fear that there will be years of market uncertainty while the legislature grapples with how to implement a complex new market structure. Lawmakers have until 2023 to establish a new, deregulated market. NV Energy on May 31 announced it has selected 1,001 MW of solar capacity with six major projects but indicated the 25-year power purchase agreements for those projects may not proceed if the Energy Choice Initiative passes.

In an attempt to dispel concerns that the Energy Choice Initiative would free suppliers to choose cheaper, nonrenewable resources, the Yes on 3 campaign endorsed Question 6. "The Energy Choice Initiative is about providing Nevadan's clean energy at lower rates through competition and innovation," Yes on 3 campaign spokesman Scot Rutledge said, emphasizing that his group wants the combination of a 50% clean energy standard and customer choice.

The PUC has also sowed seeds of doubt about the initiative. In a report it submitted to a study committee Gov. Brian Sandoval appointed to develop proposals for implementing the measure, then-chairman Joe Reynolds concluded that the initiative includes ambiguous and conflicting elements and would strip the state legislature and PUC's authority to oversee power generation while subjecting ratepayers to several billion dollars in utility stranded costs.

The International Brotherhood of Electrical Workers and the American Federation of Labor-Congress of Industrial Organizations oppose Question 3, saying it will threaten labor jobs in the utility industry.

Wider support for Renewable Energy Initiative

Question 6, the Renewable Energy Promotion Initiative, would also amend the state constitution. It would require NV Energy and alternative energy suppliers in the state to get half the power they provide from renewable resources such as solar, geothermal and wind. About 20% of Nevada's energy now comes from renewables, and the state's current standard requires 25% by 2025.

The measure is similar to one Arizona voters will decide on this November. Both initiatives are supported by the NextGen Climate Action group, which is funded by billionaire climate activist Tom Steyer. Both the Arizona initiative and Nevada's Energy Choice Initiative face louder opposition than Nevada's Renewable Energy Promotion Initiative.

Nevadans for a Clean Energy Future is pushing the Question 6 initiative with more than $6 million from Steyer's group and $385,000 from the Nevada Conservation League, according to an Oct. 16 report filed with the Secretary of State. Other supporters include some of the same groups that oppose Question 3, including the American Federation of Labor-Congress of Industrial Organizations, the Natural Resources Defense Council, the Sierra Club and Western Resource Advocates, along with renewable energy trade organizations such as the Solar Energy Industries Association, Geothermal Resources Council and Interwest Energy Alliance.

Nevadans for a Clean Energy Future Communications Director Kyle Roerink said NV Energy is not opposing Question 6. While the company is promising large amounts of new solar capacity, it plans to keep a large amount of gas-fired capacity as well. "Nevada wants more clean energy and some accountability for it," Roerink said. "We are the accountability measure to ensure 50% by 2030 ... by enshrining it in the state's constitution."

Nevada has some of the world's best solar and geothermal resources but gets 80% of its electricity from natural gas, all of which it has to buy and import from other states, said Dylan Sullivan, a climate and clean energy scientist at the Natural Resources Defense Council.

The state's current renewables standard is defined in law, not the constitution. The Nevada legislature passed a 40% by 2030 renewable standard bill in May 2017 by wide margins in the Senate and Assembly, but the governor vetoed the measure.

The most visible opponents of the renewable initiative, including Nevada State Controller Ron Knecht and state Sen. Don Gustavson, one of Nevada's most conservative legislators, are linked to the Coalition of Energy Users. Based in Roseville, Calif., the coalition advocates for affordable energy through the free market across the Western U.S. It has not filed any campaign financial reports in Nevada.