State energy regulators are poised to grant NV Energy the go-ahead on plans to construct six major solar projects, which would result of doubling solar capacity in the state and doubling renewable energy production by 2023.
A draft order by the Public Utilities Commission of Nevada released Tuesday also accepted a request by the utility and renewable energy advocates to retire early the coal-burning Valmy generation plant in Northern Nevada, approved millions of dollars in transmission upgrades and extended the lifetimes of a half-dozen natural gas plants in the state.
The commission’s draft order largely matched up with the utility’s preferred course of action in its Integrated Resource Plan (IRP), the state-mandated planning document detailing how the company plans to meet its supply and demand over the next three years.
Unveiled at a star-studded event over the summer, the utility’s IRP proposal called for six power-purchase agreements that would add 1,001 megawatts of new solar power, as well as an additional 100 megawatts of battery storage at three of the new plants. They’re expected to drive more than $2.18 billion in spending, 1,785 temporary construction jobs and around 76 long-term jobs.
Approval of the order was made possible by the failure of Question 3, which would have required the state transition to a retail electric market by 2023 and likely require NV Energy to divest all of its generating plants and assets. The utility would not have requested any new solar plants had the ballot question been approved by voters, while also spent an unprecedented $63 million to defeat the ballot question.
Once constructed, the new power plants would increase the percentage of renewable energy in the utility’s supply mix to nearly a third, up from around 14 percent in 2017.
The draft order still needs to be approved by the commission during its scheduled meeting on Friday, and can still be amended or changed by members.
Few intervening parties in the case opposed adding the six new power plants, outside of a nonprofit backed by Switch that suggested the commission and NV Energy first take more steps to ascertain which large businesses may plan to leave the utility under a state law allowing large power users to leave the company and purchase power on the open market. Eight companies, most recently the South Point Hotel and Casino and Boyd Gaming, have filed to leave the utility this year alone.
In its order, the commission found that the utility’s plan for the six new power plants “best advances Nevada’s clean energy goals” and diversified fuel sources as well as decreased reliance on natural gas. It declined to directly tackle the issue of companies leaving the utility outside of a stipulation agreement on load forecasting on which the other parties in the case had already agreed.
It’s possible that the addition of six new power purchase agreements could lead to future requests to raise rates. NV Energy warned that the cost of the new plants “are expected to negatively affect credit quality unless mitigated by other action,” which the company said it would deal with through “prudent financial management.” But the utility said that if the decision “degrades credit metrics and yielded higher overall costs,” it may request higher returns or revenue in future general rate cases, which it's required to file every three years with the commission.
The commission also ordered a conditional retirement date of December 31, 2021 of one of the two coal-firing plants located at Valmy Generating Station, which is jointly owned by NV Energy and Idaho Power. The utility requested the early retirement date for one of the two units, but said it was “not committed” and laid out six conditional factors ranging from new projects coming online, having adequate supply capacity to serve customers, and commission approval of tracking the cost of decommissioning the plant (and adding costs to general power bills) down the line.
The commission ordered NV Energy to keep it apprised of all the contingent factors related to the early retirement, and also asked to be informed if the company planned to file anything that would push back the 2021 retirement date.
Several entities, including the state Bureau of Consumer Protection (BCP) and the PUC’s own staff, recommended keeping the coal-firing units open for a longer period of time. In its arguments, the BCP estimated that power costs could rise as much as 7 percent for Northern Nevada customers due to lost “replacement capacity” for the plant, which typically only operates during peak demand times over summer months.
“Given the uncertainties, BCP believes it is bad policy for the Commission to approve Valmy 1’s early retirement with the ability to have its approval-reversed through a future compliance filing by NV Energy,” the order stated.
The PUC staff recommended that the commission order both Valmy units be retired in 2025, and that the prospect of an early retirement for the coal plant was so “heavily-conditioned that Staff cannot reliably say that the early retirement would actually occur.”
NV Energy stated that it opposed a strict 2025 deadline to close the other Valmy generating station and argued that the site could potentially be converted to a natural-gas plant or other use.
“Staff’s proposal would preclude NV Energy and the state pursuing options tomorrow that may be superior to those known today,” the utility stated in the proposed order.
The commission order also agreed that the utility can spend up to $22.89 million on transmission upgrades to connect the new solar plants to existing transmission lines, and another $720,000 to upgrade a 1.45 mile transmission line in Southern Nevada.
It further agreed to extend the lifespan of eight natural gas plants operated by the utility until the early or mid 2030s, which NV Energy said were operating reliably and would provide generating capacity in the future.
The commission also delayed a decision on changing the cost structure of a transmission project connecting Southern and Northern Nevada, asking the utility to submit a separate application dealing with the issue by May.