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OPINION: New performance-based payment structure needed for NV Energy

Bari Levinson
Bari Levinson
The sign at NV Energy corporate headquarters

Nevada needs to make much faster progress on building out its renewable energy infrastructure without harming the environment. Currently, there are about 130 applications from private companies to build utility-scale solar in the pristine undeveloped Nevada desert. While this is fantastic for increasing the renewable energy supply, it has the potential for harming our desert ecosystems, including habitats for the endangered sage grouse and desert tortoise. Once these ecosystems have been destroyed by development, they will be lost for many decades if not permanently.

Rather than using the untouched desert for the development of renewable solar, there is a better alternative: distributed solar energy. This includes using the roofs of buildings to place solar panels, and community solar, which provides small arrays of solar panels to supply a community with energy and was the topic of a Feb. 18 article in The Nevada Independent by Amy Alonzo.

Privately owned distributed solar has many benefits compared to utility-scale solar. These include: Building owners can own their own solar systems, which reduces the cost of electricity over the long run; subscribers of community solar can benefit immediately from reduced prices; the electricity is generated close to the load that it supplies, which reduces loss of electricity through long distribution lines; increased grid resilience in times when the main power grid is down; improved reliability if the system includes backup battery storage; and it uses previously disturbed land and infrastructure so it does not cause additional environmental harm.

Unfortunately, NV Energy continues to oppose distributed solar development in Nevada. The utility has effectively blocked legislation for private community solar by negotiating AB465 in 2019 that provided for a watered down utility-run Expanded Solar Access Program. It reserves 25 percent of the program for low-income customers who would receive a discounted rate.

Through this bill, they commandeered the only community solar program in the state and are slow walking its expansion. The bill called for six to 20 community solar installations in the state; so far there are only three, with no current plans to expand.

NV Energy’s influence was also a big reason for the failure of AB425 in the 2023 legislative session; this bill would have allowed solar panels on low-income multifamily housing. The reason for NV Energy’s opposition to distributed solar projects is clear— these programs would cut into its profits given its current business model, in which profits flow only when NV Energy builds new infrastructure.

There is a solution; it is called performance-based regulation (PBR), which changes the business model so that the utility is paid, at least in part, based on it meeting certain metrics, such as cost containment, reliability, energy efficiency and greenhouse gas reduction. Distributed solar systems meet many of these criteria.

If NV Energy was paid based on these metrics, rather than on its buildout of infrastructure, the company would proactively support policies that are good for its ratepayers and the environment. Legislation to enable PBR has been passed in at least 17 states and Washington, D.C., according to the National Conference of State Legislatures.

A bill (SB300) directing the Public Utilities Commission of Nevada to write regulations implementing PBR was passed in 2019. Unfortunately, the bill did not require the utility to adopt this plan. The utilities commission was making progress developing these regulations under docket 19-06008 but was receiving severe pushback from NV Energy. NV Energy representatives stated in their written comments in October 2022 that “these regulations as drafted make it extremely unlikely that the Companies will ever apply for a Plan.” 

So, we are left right where we started: We have a utility that is opposed to any increases in distributed solar despite the huge benefits to its ratepayers and to the environment. It is public knowledge that NV Energy makes large donations to legislators on both sides of the aisle — ahead of the 2023 session, it gave $185,000 to lawmakers. These large donations no doubt have impact on political will to override the lobbying pressures of the utility.

We simply must overcome the political interest of our investor-owned utility and implement a new payment structure that aligns the interests of the utility, the ratepayers and our environment. The time is ripe for a change to a mandatory performance-based regulation scheme.

Bari Levinson is a retired physician and chemical engineer who lives in Reno. She is co-chair of the Sierra Club, Toiyabe chapter’s legislative committee and a member of its energy subcommittee.

The Nevada Independent welcomes informed, cogent rebuttals to opinion pieces such as this. Send them to [email protected].


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