Pop quiz time.

Which body of law contains more regulation? The 18th Amendment of the U.S. Constitution, which enacted Prohibition, or NRS 369, which regulates alcohol licensing in Nevada? On the one hand, the 18th Amendment is much shorter — it’s only three sections and 112 words. On the other hand, NRS 369, all 17 pages and more than 16,000 words of it, allows people to buy, sell, and consume alcoholic beverages.

My point? The regulatory effect of laws can’t always be judged by their length.

The good news about Question 3 is that it’s much shorter than NRS 369. At just under 470 words, it’s downright pithy, especially compared to another proposal to amend our state Constitution that we’re considering this year. Like the constitutional amendments that both started and ended Prohibition, however, what Question 3 lacks in length it more than makes up for in potential effect. Question 3, if passed, may radically change how Nevadans purchase one of the most fundamental utilities of modern civilization: electricity. It also might lead to the construction of new regulations and new bodies of law that dwarf the size and scope of the regulations currently in effect in Nevada.

Potential. If. May. Might.

Weasel words were never so commonly used in Nevada’s writing biome; now they’re taking over like rabbits in Australia while overwhelmed editors ponder the ethicality of infecting their writers’ word processing software with something resembling myxomatosis. Meanwhile, sorting out what Question 3 might actually do is arguably keeping journalists employed. That isn’t surprising since energy decentralization, when it goes wrong, leads to unbearably high energy bills, mediocre documentaries, and the election of Austrian-born time-traveling artificial intelligences to statewide office. When it goes right, on the other hand, it leads to…

Well, nobody really knows.

That isn’t a knock against energy decentralization, to be clear. The problem is that energy decentralization is new, which is a strange thing to say about something that’s been in place in various jurisdictions for a couple of decades now. However, think about the lifecycle of NV Energy’s power plants:

Station	Capacity (MW)	Year Constructed	Age (Years)
Edward W. Clark Generating Station	1102	1954	64
Fort Churchill Generating Station	226	1968	50
Frank A. Tracy Generating Station	753	1974	44
North Valmy Generating Station	522	1981	37
Sun Peak Generating Station	210	1991	27
Las Vegas Generating Station	272	1994	24
Harry Allen Generating Station	628	1995	23
Silverhawk Generating Station	520	2004	14
Walter M. Higgins Generating Station	530	2004	14
Chuck Lenzie Generating Station	1102	2006	12
Goodsprings Energy Recovery Station	5	2010	8
Nellis Solar Array II	15	2015	3

The oldest three power plants pre-date the Public Utility Regulatory Policies Act, a piece of legislation passed in 1978 that first started the decentralization of American power utilities, and nearly half of NV Energy’s generation capacity comes from plants that pre-date the Energy Policy Act of 1992, which allowed the creation of a wholesale energy market. This doesn’t even touch on the hydroelectric plants owned by the Truckee Meadows Water Authority, several of which are over a century old (and one of which was recently for sale), nor does it touch on Hoover Dam.

What this means is any decision we make regarding power could potentially affect us — what we pay for power, how much we pollute, how much water we have to drink, even the spawning habits of fish — for generations, if not centuries. Given the stakes, some reflexive conservatism is understandable, if not wise. Power generation and distribution is a grid-shaped Chesterton’s Fence; we better not tinker with it if we don’t understand the choices that created it.

Good thing we’ve done this before, then.

In the 1970s, two forces conspired together to decentralize our telephone system: New developments in microwave communications technology, and a renewed interest from the Justice Department in breaking up the AT&T-held monopoly on the Bell Telephone system. Similar to the disputes between residential solar energy producers and NV Energy, AT&T fought a long-running struggle in the courts to prevent companies from connecting their competing long-distance services to AT&T’s monopolized home telephone network. This came to a head in 1978 with the Execunet II decision, which required AT&T to allow interconnect access to MCI’s long distance service offering. Soon after, Southern Pacific began offering long-distance service through their Southern Pacific Railroad Internal Network Telecommunications product, which used a combination of microwave communications technology and Southern Pacific railroad rights-of-way; this would eventually become the genesis of Sprint Corporation. A few years later, prodded by significant legal pressure from the Justice Department, AT&T voluntarily initiated the breakup of the Bell System, which led to the creation of several regional “Baby Bells.”

So, what happened after telephone service was decentralized?

For starters, telephone service wasn’t deregulated, just as Question 3 won’t deregulate the energy industry. On the contrary, the boundaries of each Baby Bell were defined using the Local Access and Transportation Area (LATA) framework, which assigned a Regional Bell Operating Company to each LATA (both of Nevada’s LATAs were assigned to Pacific Telesis, which later became PacBell, via PacBell’s Nevada Bell subsidiary). Additionally, long distance telephone rates were, and still remain, governed by the FEC's Pricing Policy Division.

Telephone service, however, was decentralized: no longer would the manufacture, operation, and maintenance of the telephone system remain in the hands of one company. Instead, consumers could choose from several competing long-distance telephone service providers and telephone manufacturers. Most notably, this led to a drastic decline in retail telephone prices and the near-extinction of leased residential telephones.

What about service rates? According to a 1995 report by the FEC, the price of long distance phone service was decreasing rapidly long before decentralization took place:

However, regional long distance rates, which weren’t declining as fast as transcontinental long-distance rates, declined noticeably faster after decentralization took hold in 1984:

Given this, it’s not surprising that the effect on rates if Question 3 passes is indeterminate — decentralizing the phone system had only a modest effect on service rates, so it makes sense that decentralizing the power grid would bring similar results.

The real gifts of decentralization, however, are two-fold: Specialization and variety.

Companies like MCI and Sprint initially made inroads against AT&T by focusing on corporate customers, as corporate customers made large volumes of calls to predictable locations at predictable times. Consequently, MCI, Sprint, and similar companies could build only the infrastructure needed to connect their customers’ offices together, keeping costs and complexities low, and then resell that same infrastructure to other companies in similar locations. This specialization, incidentally, is similar to how companies are competing against NV Energy now and why several companies have already paid NV Energy’s exit fee. By specializing in services that specific market segments demand, each service provider is able to provide superior service for its customers.

Additionally, MCI and Sprint were both building their services on a new technology -— microwave transmission — which they, as a necessity, had to go all-in on since they had no other means of providing their services. This meant customers could choose from an increased variety of sources for long-distance telephone service: traditional copper landlines or microwave transmissions, both with their own set of benefits and drawbacks. Similarly, certain corporate and residential customers are now beginning to demand a greater variety in how their power is generated, with several customers expressing a strong preference for solar, wind, geothermal, and other renewable power options.

(This, incidentally, is why I’m personally opposed to Question 6. If Question 3 passes, those who want renewable power will have the right to contract for it without their preferences dictating rates and selection for everyone else. People make better choices when you trust them to make choices; when you try to take those choices away, they tend to reflexively resent and oppose the choices imposed upon them out of spite.)

As decentralization done properly has a proven track record of increasing variety, service, and keeping costs low, the final question to ask, then, is this: Does Question 3 do decentralization properly? The answer is an enthusiastic, full-throated “Maybe.” Why “maybe”? Because, contrary to the concerns many have expressed about the framework for decentralization imposed by Question 3, there is no framework for decentralization built into Question 3.

No, really. It doesn’t exist. Read the ballot language — you won’t find one.

What Question 3 does is grant everyone in Nevada the right to choose a provider of electric utility service and assigns a deadline (July 1, 2023) for the Nevada Legislature to write regulations to make that possible. Crucially, any legislation written by the Legislature can be amended, either in regular or special session, if it turns out they implemented decentralization improperly — the only thing the Legislature won’t be able to do is deny Nevadans the right to choose their own electric utility service provider.

Really, that’s it.

Rights belong in the Constitution. Decentralization of Nevada’s power grid is long overdue. And people should have the right to decide whether they want their power provided by a solar, coal, natural gas, or even nuclear (yes, nuclear — so nice of the federal government to consider shipping Nevada a bunch of free fuel) power source. It’s well past time for Nevadans to approve a well-written constitutional amendment that defines and protects that right, and Question 3 more than qualifies.

David Colborne has been active in the Libertarian Party for two decades. During that time, he has blogged intermittently on his personal blog, as well as on the Libertarian Party of Nevada blog, and ran for office twice as a Libertarian candidate. He serves on the Executive Committee for both his state and county Libertarian Party chapters. He is the father of two sons and an IT professional. You can follow him on Twitter @ElectDavidC or email him at [email protected].

References:

http://transition.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/SOCC/95socc.pdf - Page 277

CPI - U - https://www.bls.gov/cpi/tables/supplemental-files/historical-cpi-u-201808.pdf