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CARSON CITY — NV Energy’s proposed “NVision” plan, currently being considered by legislators in Carson City, will increase the cost of electricity, does not include a cap on rate hikes caused by increases in natural gas prices and forces ratepayers to pay NV Energy for stockpiles of coal it has purchased but no longer wants to use. Those are the findings of a new NPRI analysis of Senate Bill 123, which contains the NVision plan.

The analysis, authored by NPRI deputy policy director Geoffrey Lawrence, is entitled NV Energy plan would impose big, new hidden costs on ratepayers: ‘Fuel switch’ plan resembles a‘bait‐and‐fuel‐switch.’

It details how SB 123 would increase the monopoly earnings of NV Energy, while forcing ratepayers to shoulder the risk of higher natural gas prices.

“NV Energy's NVision plan would increase the cost of electricity and reduce regulatory oversight by the Nevada Public Utilities Commission while incentivizing waste and inefficiency,” said Lawrence. “There is no cap on rate hikes caused by an increase in natural gas prices, which are historically volatile. These quarterly ‘fuel-cost adjustments’ would not be part of general rate hearings.”

Lawrence noted that the plan would be a financial boon for NV Energy, which, because of government regulations guaranteeing a return on equity of 10.5 percent, has a perverse financial incentive. NV Energy is financially rewarded if it can get state lawmakers to impose more costly and inefficient production methods, such as the NVision scheme.

“Ratepayers would have to reimburse NV Energy for constructing new power plants and also pay NV Energy for the capital costs of coal-fired power plants it's no longer using and even for stockpiles of coal it has purchased but no longer wants to use,” stated Lawrence.

Lawrence then described how a similar plan in Colorado is already raising electricity prices and imposing severe economic consequences.

“Economic modeling of a similar plan in Colorado found that Colorado ratepayers will now pay between 11 to 50 percent more for power and that this would result in the net loss of between 280,000 and 1,180,000 jobs,” said Lawrence.

“As currently envisioned, this plan would be a government-mandated wealth transfer from Nevada’s ratepayers — including poor families and struggling businesses — to Nevada’s government-mandated energy monopoly.”

Lawrence concluded that open competition on the retail electricity market, modeled after Texas, is needed to lower Nevada’s regionally high electricity prices.

The full analysis — NV Energy plan would impose big, new hidden costs on ratepayers: ‘Fuel switch’ plan resembles a ‘bait‐and‐fuel‐switch’ — is available at http://www.npri.org/docLib/20130522_NVEnergyPlan-BaitandSwitch.pdf.

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LAS VEGAS — Government-energy mandates will cost Nevadans $2.275 billion while lowering employment by 1,930 jobs over the next dozen years, concludes a new study from the Nevada Policy Research Institute.

The study, entitled RPS: A Recipe for Economic Decline, details the wealth-destroying impact of Nevada’s Renewable Portfolio Standard, which mandates that NV Energy use renewable-energy resources to supply 25 percent of Nevada’s electricity by 2025. The report was produced by three scholars from the Beacon Hill Institute for Public Policy Research at Suffolk University: David G. Tuerck, Paul Bachman and Michael Head.

Because renewable energy is more expensive than energy from traditional sources, the study finds, the RPS will kick Nevada’s electricity prices 6 percent higher by 2025.

“Increases in electricity costs have a profound negative effect on the economy — similar to tax increases — because prosperity and economic growth depend on access to reliable and affordable energy,” said Bachman. “Since electricity is an essential commodity, consumers and producers of goods will have limited opportunity to avoid the costs added by the renewable standards.

“Over 12 years, Nevada’s RPS will cost families an average of $940 in higher power rates. For the poorest members of society, these energy taxes will compete directly with essential purchases in the household budget, such as food, transportation and shelter.”

The Nevada Legislature is currently considering changes to Nevada’s RPS, including Senate Bill 252, which would not allow energy-efficiency measures to count towards Nevada’s 25 percent mandate.

“If SB 252 passes, the detrimental impact on Nevada jobs and household budgets created by the RPS will only get worse,” said Geoffrey Lawrence, NPRI’s deputy policy director. “Even though Public Utilities Commissioner David Noble recently noted that ratepayers ‘are maxed out,’ many legislators continue to push for laws that will drive electricity prices even higher.

“Government cannot create a more prosperous society by requiring the state’s public utility to produce an essential product through less-efficient and less-reliable means. Anyone who says otherwise is either economically illiterate or willfully misleading.”

The study notes that power provided by wind and solar sources have significant “intermittency” issues — meaning that when the wind doesn’t blow or the sun doesn’t shine, wind and solar power plants don’t produce electricity. Thus, in order to keep the voltage of the electricity grid in equilibrium, so-called “renewable” resources like wind and solar power still require traditional power plants to run, or idle continuously, as back-up generation.

“If the wind dies down or blows too hard, which trips a shutdown mechanism in commercial windmills, another power source must be ramped up or cycled instantaneously,” said Bachman. “Because of these inherent limitations, new wind and solar generation plants do not replace any dispatchable generation sources.”

Added Lawrence: “High electricity prices already limit job creation and restrict Nevada’s economy. Even if the Legislature doesn’t impose new RPS mandates, the RPS currently in place will reduce real disposable income by $233 million over the next dozen years.

“Unfortunately for Nevada job-seekers, businesses and residential ratepayers, many politicians think they can get away with making the state’s economically destructive RPS even more damaging for everyone in the state. They think voters won’t get it.

“Many energy bills of this sort — from NVision to SB 252 — are before the Legislature this session. But they basically only increase the cost of electricity, taking money out of citizens’ pockets and giving it to the political cronies in the renewable-energy business.”

The full study, RPS: A Recipe for Economic Decline, is available at http://www.npri.org/docLib/20130424_RPS-ARecipeforDecline.pdf.