Power prices in Nevada have decreased more than those in any other state over the last decade, bucking a nationwide trend of rising electric prices and thanks in large part to the declining cost of natural gas.
A new study by S&P Global Market Intelligence published earlier this month shows that average power prices in Nevada decreased by 14.5 percent between 2009 and 2018, the largest such decrease of any state in the country over the ten-year time period.
Nationwide, the study found power prices on average had gone up by 9.7 percent over the last 10 years, and that only seven states (including Nevada) had seen price decreases over that same time period. The report largely credited the price decreases in Nevada and other states to heavy reliance on natural gas — counting for roughly 69.6 percent of total electric generation in Nevada, a percentage of the state’s overall fuel mix that has remained constant over the decade.
That reliance on natural gas was boosted by the resource’s plummeting cost — the report states that the price of natural gas has been more than halved since 2008. Three of the four states with the largest electric price decreases (Nevada, Florida and Delaware) rely on natural gas for more than 65 percent of their fuel mix.
NV Energy, the primary electric utility for Reno and Las Vegas, owns and operates 10 natural gas plants in Nevada. Improvements in technology in the mid-2000’s, including horizontal drilling through hydraulic fracturing (fracking) changed the economics of natural gas production and made it much cheaper and easier to access; a 2014 Federal Reserve Bank of Kansas City study found that production from shale gas formations increased by more than 400 percent between 2007 and 2012.
NV Energy spokeswoman Jennifer Schuricht said in an email that the decrease in rates was because of long-term planning around natural gas production, and that the utility would “continue to seek opportunities to find more savings for customers.”
“The fact that our customer bills are lower today than they were a decade ago is the result of careful planning and a commitment to deliver reliable service, increased customer options and more clean energy without raising rates,” she said in an email. “The investments we’ve made in highly efficient natural gas generating stations, our more recent additions of low-cost renewable resources, and the work of NV Energy employees to watch our costs are benefitting all customers through decreasing rates.”
Although some concerns were raised that NV Energy’s purchase by Berkshire Hathaway in 2013 could possibly lead to higher electric prices, the report indicates that the utility’s moves to eventually phase out coal-fired generation in 2013 and double down on renewable power (winning approval from regulators to contract with multiple new large-scale renewable power plants) have not resulted in any major price swings for the utility’s customers.
In the meantime, NV Energy is unlikely to significantly reduce its reliance on natural gas; the utility won approval in its 2018 Integrated Resource Plan to extend the lifespan and push back the retirement date of eight natural gas plants operated by the utility into the mid-to-late 2030s.
However, NV Energy’s use of renewable generation is likely to increase over the coming decade after state lawmakers approved a bill earlier this year requiring the state’s Renewable Portfolio Standard to gradually raise to 50 percent by 2030. NV Energy publicly supported the legislation, which also allows the utility to avoid administrative fines for failing to meet the renewable standard unless it falls short for three years in a row (the utility recently announced it had met its RPS requirement for the ninth year in a row).
The Public Utilities Commission voted earlier this month to approve a stipulation agreement that will decrease NV Energy’s revenue statewide starting in October, resulting in lower power bills for residential customers in Southern Nevada ($0.79 per month) and Northern Nevada ($2.12 per month).
Northern Nevada customers are also likely to see a rate decrease of roughly 50 cents a month under a general rate case filed by the utility in June. Rates statewide decreased in early 2018, after passage of the federal Tax Cuts and Jobs Act.
NV Energy CEO Doug Cannon has also promised that the utility will seek a $100 million rate reduction during its next general rate case in 2020.