Voters in Nevada will face a number of ballot questions this fall.
One of them is Question 3, a measure related to Nevada's electricity market.
Opponents of the measure say it is too cost-prohibitive to be effective.
Tell us about your group the Coalition to Defeat Question 3?
“The Coalition to Defeat Question 3 is a large collaborative group. We have more than 7,000 individual members from across the state of Nevada. We have small business groups. Almost all the Chamber of Commerce groups from across the state have joined our coalition. We also have environmental groups, groups like the Sierra Club that have joined our coalition… We also have senior groups like the AARP. In addition, we have most of the labor groups that oppose it over concerns for jobs. And in the rural areas, a lot of the cooperatives are part of our coalition.”
Skenandore says her coalition also includes elected and community leaders. She said people who often not on the same side of an issue are coming together to oppose Question 3 because it is risky and costly.
From the perspective of your group, what would Question 3 do?
“Question 3 is a constitutional amendment. I would dismantle and deregulate our current electrical system, which by the way is one of the nation’s most affordable and reliable systems in the country. It would dismantle and deregulate our current system and actually leave it to state Legislators and the courts how to implement the new electricity system. Because of that, we feel it is very risky. It is also costly because in every state that we have seen that has deregulated its electricity system we have seen rates go up.”
If people don’t like the way Legislature sorts out deregulation, they could be voted out?
“The reality is it's a constitutional amendment. We're locking this into our state constitution. So regardless of what anyone elected official feels or their views on the situation even if they find Question 3 were to pass, if they find to collectively that this won't work for our state they would be forced to implement it and walk that plank no matter what because it's locking it into our state constitution. And there's something to be said for the fact that no state in our country has ever used electricity deregulation as a constitutional amendment.”
Is the constitutional amendment aspect of Question 3 most troubling?
“I think it's a variety of things that are troubling. You know it depends on, of course, who your audience is and who you're speaking with. I can tell you the general consensus is yes locking this in our state constitution people are concerned about that number one. Number two: there is really no plan. So, if you ask the proponents on the yes side, ‘what is the plan if Question 3 were to pass? What are we truly voting on?’ And the reality is we don't know what we're voting on because the ballot language is so vague.”
She said the only plan is to leave it in the hands of lawmakers and the court system. Skenandore says if something is wrong with the amendment it will take a least four years to undo the damage.
If Question 3 passes from the perspective of your group what happens next?
We hope voters will in fact vote no. But the reality is if in fact Question 3 passes, it's going to cost ratepayers and taxpayers a lot of money across the state of Nevada. So regardless if you have the energy or if you're in Northern Nevada or in one of the rural areas in northern Nevada with a co-operative, we're all going to be negatively impacted by this. The Public Utilities Commission actually did an independent investigatory report on Question 3 and what they found was to implement a new electricity system. It would actually cost a $100 million to implement and execute the new system and an additional $45 million per year in administrative and additional costs to just maintain that new electricity system.”
She says those costs will be passed onto ratepayers across the state. She also said that if Question 3 passes NV Energy would be forced to divest some of its assets, which would push a stranded assets cost onto taxpayers. She said the PUC report says the cost would $4 billion.
Why would there be such a large price tag if the market is being opened to more competition?
“As I shared if this were to pass, NV Energy would be forced to divest because they would have to sell off their generating facilities, their power plants and also sell their long-term power purchase agreements… essentially if Question 3 were to pass it would force a new electricity system to be established. NV Energy cannot exist the way they do today if this were to pass. Customers cannot remain a customer of NV Energy is if question 3 were to pass and that divestiture that would be forced upon them is what the $4 billion stranded asset costs consists of that would be passed on to the taxpayers.”
Skenadore says of the 24 states that attempted electricity deregulation only 14 still have that system. And of those 14 states, she says all of them are experiencing higher electricity rates. She said those states have less reliable energy and fewer consumer protections. There is also a concern about predatory marketing practices by some of the retail providers.
You’ve said that if Question 3 passes people couldn’t be customers of NV Energy in the same way, but some people don’t like NV Energy:
“The reality is electricity is not your normal goods and services. So, the claims by the proponents on the yes side of this ballot measurable say competition is good it will drive down rates. Well, there are two things I have to say to that. In those 14 states that are currently deregulated, they are not experiencing lower rates, in fact, they're experiencing higher electricity rates. Number two: they're experiencing a less reliable electricity system. And again, electricity it's not your normal goods and services. It's something that we rely on to literally live, run our household. Businesses rely on reliable electricity to run their operations. If we don't have an affordable and reliable system, we're going to have issues and consumers will have issues with interruptions in service and those higher rates that I talked about.”
She says regardless of whether NV Energy is a monopoly the state still has some of the lowest energy rates in the country. She said the rates in Nevada are 17 percent lower than the national average and deregulated states have rates 30 percent higher than Nevada’s rates.
How would question three's passage be felt in rural parts of the state versus the more urbanized centers of Reno and Las Vegas?
“I think it's important and it's a great question because Question 3 is a constitutional amendment. No one is protected. This isn't really just about NV Energy. It's about some of those co-ops and the municipal electricity providers across the state. So, there's about 14 co-ops mostly in northern Nevada areas. They are not protected under Question 3 and they all have come together to oppose this ballot measure because again it's a constitutional amendment.”
She says the language in the ballot measure prohibits any entity or individual from getting in the way of being able to sell electricity. She says it is important for people to understand that if this ballot measure is passed it will re-write the state’s constitution.
Why wasn't the opposition to question three strongly mobilized in 2016 as it appears to be now?
So, in 2016 … back then when this was originally put on the ballot there was no plan. So, I think a lot of people were waiting to see well what will the proponents come to the table with? Will they have some kind of plan on what this new electricity system could look like? What would the pros and cons of it be? What would the implications be? How would it affect rates? Fast forward to 2018 there still is no plan. So, a lot of the feedback that we have heard in a lot of the conversations we're having with community groups and voters is that they were kind of waiting for that plan. So, they were really unsure in 2016 of what this was really about. And then others… we're a little confused thinking this was about solar.”
She said there still no plan from the proponents of Question 3. Skenandore says the only plan from the yes side is to leave the details up to the Legislature. She says that is not a plan she is willing to vote for.
Should there be competition in the utilities market?
“I think if you look at electricity it's a major commodity. It's a thing that we need to live. We need a reliable system so that we don't experience what the other states that have deregulated are experiencing with blackouts, unreliable service, rate hikes. A lot of these electricity companies that come into deregulated states they actually will lock consumers into contracts that have a teaser rate and after six months or 12 months their rates go up two and three times and they're locked in these long-term contracts that then require hundreds of dollars to exit them... if your only choice with Question 3 is to have multiple providers but we all have higher rates. That's not really choice.”
Tracy Skenandore, communications director, Coalition to Defeat Question 3
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