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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.
What do supporters of the measure say it will do to benefit Nevada?
In your eyes, what would passing Question 3 do for Nevada?
“It would do three things. Number one: it would ensure that Nevada’s rates and costs for energy are under the control of individual consumers that is consumers will be able to control their bills, be able to choose their provider and ultimately be able to lower their overall costs of providing themselves energy services. Point number one: Question 3 will lower your bills. Point number two: Question 3 – if passed – will enhance the amount of renewable energy into the state and enhance the jobs and support for renewables.”
Wellinghof pointed to Texas as an example of a state that deregulated its energy market and saw a “ramping up” of renewable energy sources.
He said there will be more renewable energy because people will demand it and when people get the choice they’ll choose renewable energy.
“The third point I want to make is that reliability will not change. All Paul Caudill an officer with NV Energy said this himself on the Jon Ralston show a little over a year ago. And yet we’ve got ads on TV with people in wheelchairs, we’ve got ads on TV of firemen alleging that if we put Question 3 the lights will go out or the air conditioning will go out or the firemen won’t be able to find your house. All of that is false.”
Wellinghof said reliability won’t change because the power infrastructure will stay in the hands of NV Energy.
Would Question 3 help the cause of increasing renewable energy, which is also on the ballot in Question 6?
“Not only would it help that cause but the supporters of Question 3 have endorsed the Question 6 – 50 percent portfolio standard that’s on the ballot. Unlike NV Energy, NV Energy has not endorsed Question 6. I think that tells you quite clearly where NV Energy stands versus where the supporters of Question 3 stand.”
Supporters of Question 6 have stayed neutral on Question 3. Do you know why?
“I think they’re just focusing on their question. They don’t want to get into the politics of things with voters one way or the other. That’s probably a smart thing for them to do.”
What happens if Question 3 passes?
“The good thing is we won’t see immediate changes. I think that’s a positive thing. Under the ballot initiative, the way its structured the Legislature actually has three sessions to formulate the details of consumer protections, the details of the structure to ensure that people have an open, transparent way to shop for competitive providers – the way they do in Texas. A structure to make sure all the pieces are in place that the consumers get the same type of advantages that they do in Texas and Pennsylvania and other states.”
Wellinghof says if the ballot initiative passes the Legislature will start working on structuring some of the laws governing deregulation and setting up the competitive market in 2019 and are expected to be finished in 2023.
How will the impact be different in rural and Northern Nevada than in Southern Nevada?
“You won’t see a lot of difference. The interesting thing is that because we have the ability to provide electronic financial transactions for these new competitive providers you could have a competitive provider that has 100,000 customers in Las Vegas and they could have 10 customers in Elko and 50 in Ely and 75 in Fallon and 10,000 in Reno and it wouldn’t matter all under the same retail provider that any consumer in Nevada could choose.”
He said areas that have co-op or municipal provider will still have an opportunity to choose that provider. Those rural areas will also have a chance to choose from a “number of retail providers” as well.
MGM Resorts and Switch both left NV Energy but they had to pay a large exit fee for leaving. Will Question 3 essentially allow households to do the same thing without paying the fee?
“Exactly in the sense that a number of retail providers can come in an aggregate large number of customers that will ultimately make that aggregate group of customers look like a Switch or look like an MGM Resort to an outside wholesale provider who will be providing wholesale energy to that retail provider who has all those aggregate residential customers.”
Wellinghof says he is concerned that if Question 3 isn’t passed he is concerned that residential customers will be left behind and be “subject to the whims of NV Energy.” He says that could mean higher rates because residential customers would “be the only ones left on the system.”
Why is this going through the measure of a constitutional amendment rather than legislative action?
“I’ve participated in every legislative session since 1975 and it is clear to me that the one entity that has the most power in the Legislature is the utility, is NV Energy, Nevada Power, Sierra Pacific Power.
If we don’t pass this on the ballot, if the people of Nevada don’t take this up as their own initiative, I think it will be impossible to get it through the Legislature given the power that NV Energy wields in those legislative halls.”
How much will it cost to make Question 3 a reality?
“It will cost less than the benefits. Certainly, there is going to be costs in setting up consumer protections, costs in setting up structure to oversee a market. You’ll go from what is an economic regulator that actually sets prices. NV Energy has set prices in Northern Nevada and Southern Nevada that are determined by the Public Utilities Commission to a market regulator that will oversee a number of retail providers. So, there will be shifts but there will also be savings because you won’t be doing as much of that economic regulation. So, the state agencies that oversee it will be doing other functions. There will be costs but ultimately the savings will be much, much higher than the costs.”
Even with that, is there an estimate of what a preliminary price tag will look like?
“Some of the discussion before the governor’s committee on energy choice indicated that several millions of dollars to set up certain consumer protections. But when you’re talking of saving hundreds of millions of dollars for consumers, it’s very minor in the scheme of the overall cost-benefit of the measure.”
If Question 3 doesn’t pass, do you think there will be lobbying in the Legislature to enact some of the provisions?
“Certainly, the Legislature is going to have to pay attention to the fact that in 2016 there were 780,000 Nevadans who wanted choice. Whatever level of Nevadans we’ll see in 2018 – I think we will get a majority and I think Question 3 will pass – we will win – but if for some reason it does not that doesn’t necessarily mean that Nevadans don’t want it.”
He said there has been a lot of misinformation about the ballot measure in the campaign against Question 3 but he says no matter what happens the Legislature is going to have to pay attention to the fact that Nevadans want change.
What should competition in the energy market look like?
“It should look like what it looks like in Texas right now.”
Wellinghof said a friend of his who lives in Houston sent him his power bill for August and he’s paying 7.2 cents per kilowatt hour. Wellington compares that to Northern Nevada where they pay close to 10 cents a kilowatt hour. In Southern Nevada the price is closer to 11 cents a kilowatt hour, he said.
“What I’m hoping we’ll see is robust, open opportunity to choose among multiple providers. In Texas, there are as many as 50 different providers who offer 150 different plans that can be ranked in multiple ways on a website.”
If you were talking to someone who was undecided on Question 3, what would you say to convince them to vote yes?
“I would say don’t believe the misinformation and fear being spread on TV believe the facts. Your bills will be lower. There will be more renewable energy, reliability won’t change. Vote for Question 3”
Jon Wellinghof, CEO of GridPolicy, Inc.; former chair of the Federal Energy Regulatory Commission (2009-13)
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