Nevada NewsMakers

News - July 31, 2018 - by Ray Hagar

By Ray Hagar

Nevada Newsmakers

Ample TV advertising on both sides have not made the debate over Nevada's Question 3 ballot question any clearer.

It is a lot to swallow. The complex ballot question impacts all Nevadans who consume energy. Question 3, the Energy Choice Initiative, would do away with the state’s NV Energy monopoly in favor of retail choice.

Phil Satre -- the former Nevada gaming/hospitality executive and innovator who is now the co-chair of 'No on 3' -- tied his opposition to a simple message Tuesday on Nevada Newsmakers:

If it's not broke, why fix it?

Things are going well economically in Nevada, he said. Why change the whole system when so much uncertainly looms with the new proposals?

"Why would we do this in this state when we have come out of a recession, finally got our footing, gotten unemployment rates down to almost all-time lows, while the housing market has surged?" he said.

"The risks that we went through during the Great Recession, we're getting rid of those and again we are becoming an attractive place for people to move their businesses or residences to," Satre said.

"All those things will be put at risk when you change the energy market and that can lead to uncertainty about what my rates are going to be and what my bills are going to look like, especially when you bring a small business here," he said.

"When I look at this, I think it is risky, costly and it is bad timing," he said.

Satre also pointed to Nevada's current supply of relatively inexpensive energy and negative impacts of deregulation in other states.

"I don't think it is going to work and the evidence is that in most states that have approached it, it hasn't worked," he said. "If you look at what has happened in energy in this state, since 2009, the rates for the customer have dropped by 15 percent. We are among the lowest in energy costs in the United States and we are lower than all 14 states that deregulated in the 1990s."

Satre's fears of uncertainty are backed up by recent reports from the Guinn Center, a think tank in Las Vegas, the Public Utilities Commission and Gov. Sandoval's 22-member energy committee.

"You have to look at the detailed information of the Guinn Center, what the PUC looked at and what the Governor's Energy Commission looked at," Satre said. "All of them reached the conclusion that this is very risky and could be very costly."

The uncertainty of Question 3 was summed up in the Guinn Center report's executive summary:

“Many Nevadans likely want to know what will happen with their electricity rates. This report finds that this question cannot be answered with any certainty because there are too many variables that interact with one another even to produce a reasonable forecast," it stated.

Proponents of Question 3 have said eliminating NV Energy's current Nevada energy monopoly would lead to competition among suppliers which may lead to lower prices. Satre, a former NV Energy chairman of the board, said major companies would benefit from such an arrangement but not households or small businesses.

"The consumers at the residential level and the small businesses level have the least amount of power," Satre said. "I don't mean that in a sense of energy power. I mean that in terms of having the power to get the rates they want.

"The large users, some of the supporters of Question 3, have the ability to negotiate long-term contracts with energy providers. In fact, they have that ability right now in the state of Nevada," he said.

If passed, Question 3's cloudy future may not be quickly resolved, Satre said.

Nevada consumers may have to wait years to finally know how the new system would work, Satre said, basing his projection on other states that have gone to deregulation.

"This (issue) is going to be up to the Legislature and probably the courts because when you look at the experience of other states (with deregulation), it has been their legislatures that make that decision and that decision has to be made in about a four to five-year years period," he said. "So we are going to have a long period of implementation and we are not going to know what it is going to look like."

Question 3 is billed as a battle among billionaires. Las Vegas Sands Chairman and CEO Sheldon Adelson has been Question 3's biggest proponent, becoming active after state regulators blocked the Sands from leaving NV Energy's grid without first paying a $24 million fine. Rob Roy and Switch are also major supporters of Question 3.

Warren Buffett, the famous investor, is chairman of Nevada Energy's parent company. He said he would sell power plants and stop selling electricity in the state if Question 3 is voted into law, according to the Reno Gazette-Journal. Nevada rate payers would also be liable for paying off about $4 billion in NV Energy's stranded assets in Nevada if Question 3 becomes law, Satre said.

"The rate payers in Nevada would have to pay that because that investment was made by the company at a time when the structure said 'provide us with reliable, lower cost energy as efficiently possible,' " Satre said.

Nevada ratepayers would incur other costs if Question 3 is approved, Satre said.

"You see in the PUC report that it is going to cost about $100 million in the state of Nevada to implement (the new system) and then it is going to cost about $5 million a year to carry it out annually, under the new format," Satre said. "That is a very expensive proposition for the rate payer."

Question 3 is at the end of a long road to become part of the Nevada constitution. It has already been approved by an wide margin in its first general election vote two years ago.

It becomes part of the constitution if it passes this November. The process to then remove it from the constitution would take, at minimum, another four years.

Nobody really seemed to notice the ballot question the first time around in 2016, Satre said.

Now it is a pressing issue.

"I think most of the people would say, I don't even know what I voted on," he said of the 2016 vote. "I think when you talk to people who voted on this, there was almost no information out there for the consumer. Many of them thought they were voting on rooftop solar, which has nothing to do with this."

Although NV Energy is actively campaigning against the measure now, it mounted little opposition in 2016.

"I can't answer that," Satre said when asked why NV Energy was so complacent in 2016. "You will have to talk to somebody from NV Energy."

Being a monopoly is not necessarily a bad thing, Satre said.

"It is a monopoly that is working for this state and the consumers in this state, particular the residential consumers, the small businesses consumers and the rural consumers," he said.