Sen. Harry Reid has a history of taking on NV Energy, the state’s electric monopoly, and will do so again today in his biennial speech to the Legislature in Carson City.
According to sources familiar with the speech, Reid will talk broadly about diversifying Nevada’s economy and specifically press legislators to strengthen the state’s renewable energy mandate.
A law known as the renewable energy portfolio sets out the percentage of energy delivered to Nevadans that must come from renewable sources such as solar, wind, geothermal and hydroelectric.
In 2005, lawmakers ramped up the requirement — 15 percent of energy in 2011 had to come from renewables, increasing to 25 percent in 2025.
I’m told Reid will recommend the Legislature at least take a look at expanding the renewable requirement. California is increasing its requirement to 33 percent by 2020. Colorado is moving to 30 percent by 2020 for its large utilities.
The mandate and ones like it in other states have spurred research and investment in renewable energy, helping drive down costs.
The problem with Nevada’s renewable requirement is that NV Energy has used its juice in Carson City — the company is one of the biggest financial contributors to political campaigns and has a slew of connected lobbyists — to carve out loopholes. Reid is expected to tell the Legislature that at the very least it needs to close the loopholes.
One allows the company to win credit toward the renewable requirement by investing in energy efficiency. Encouraging energy efficiency might be good policy, but it has nothing to do with investment in renewable energy.
My colleague David McGrath Schwartz reported last year on another loophole that allows the company to store up renewable credits over time, like in a bank, allowing it to skate on it in future years.
The utility has been buying significant amounts of its renewable energy out-of-state, including hydroelectric power from some Idaho dams that are as much as 100 years old.
According to 2011 filings with the Public Utilities Commission, by one measure, one-third of the utility’s renewables came from these sources, while just 9 percent came from solar power.
But the worst part is that when the company exceeds the renewable requirement, it can carry forward renewable credits to future years. So, in prior years the company has been buying renewable energy from out of state, exceeding the renewable requirement and rolling forward the surplus into future years, obviating the need for future investment in renewable energy here in Nevada.
“The utility is able to meet the standard for the rest of the decade without investing in another megawatt of renewables in Nevada,” said a source familiar with Reid’s speech.
This makes the renewable requirement meaningless. Indeed, instead of leading to a rush of solar power capacity, more than 90 percent of the fuel we consume comes from outside the state, according to the U.S. Energy Information Administration.
The problem is that without demand for renewable energy, there won’t be investment in new solar — investment that will lead to cost-saving innovations so that solar can become more competitive with fossil fuels.
We want renewable energy investment because we have a lot of sun and wind and geothermal and should be able to benefit from the new technology.
Just as important, greenhouse gas emissions and global warming aren’t some abstract, in-the-future problem. Scientists fear climate change could worsen water shortages in the Southwest, which means we have a real stake in a cleaner energy future.
The company has previously said the short-term contracts to out-of-state providers were the only way to meet the renewable requirement while holding down our power bills.
Developing renewable energy here in Nevada is more expensive, though not as much as you would think if you factor in the enormous costs that will eventually be associated with climate change.
And, the only way to bring the cost down is investment, the kind that was supposed to result from the renewable requirement.
Here’s what the company tells me: “NV Energy has made remarkable progress with its renewable energy portfolio, and our customers are now benefiting from nearly 40 geothermal, solar, wind, biomass, waste heat recovery and small hydro facilities throughout Nevada. We look forward to continuing to work with Sen. Reid, Gov. Sandoval, our Legislature and regulators to constantly improve our energy portfolio in the best interests of the state, our customers and our shareholders.”
Call me crazy, but I suspect shareholders hold more sway with company executives than the state or customers.
A company spokeswoman said last year that by 2013, NV Energy didn’t expect to be making any more of those out-of-state purchases.
If that’s the case, then the utility shouldn’t have a problem if the Legislature moves to close the loophole. We shall see.
Reid has taken a tough line with the utility before, opposing new coal plants and calling for the closure of the Reid Gardner coal plant. If Reid really engages on this fight on the renewable requirement, it should be fun to watch.