In 2015, Nevada had the fastest growing market in the nation for rooftop solar panels. According to the public radio show Marketplace, there was a new customer every 40 minutes. Business was booming and business was good.
Now, though? The market is dead. Hundreds of solar company employees lost their jobs as every major solar company in the state fled to do business in our neighboring states.
This is what happens when an energy utility decides to protect its monopoly.
Luckily for Nevadans, this monopoly will be up for a vote in November in the form of Question 3: the “Nevada Legislature to Minimize Regulations on the Energy Market and Eliminate Legal Energy Monopolies Amendment.”
Specifically, this ballot initiative would amend the Nevada Constitution to require legislators to write a law eliminating monopolies and therefore ensuring a free and open energy market in the state.
Though the name is deceptively long and the text of the question deceptively uninteresting, this proposed amendment to Nevada’s constitution is necessary in the modern energy landscape.
But first, some background.
NV Energy’s true monopoly on power in Nevada can be traced back to 1999 when the Nevada Power Company merged with the Sierra Pacific Power Company. Though they kept the names separate for nearly a decade — only changing their name to NV Energy in 2008 — the two companies operated under much of the same umbrella in an effort to reduce costs.
That point is important. It’s called an economy of scale. As production increases, costs decrease. Therefore, as a single energy company is able to take on all the costs of production, the final cost of that power for the consumer should be cheaper than if there was competition.
The thing is though, these benefits aren’t necessarily playing out like they should. According to an analysis by WalletHub, Nevada pays more for power than all of its neighbors except Utah. More than that, rates aren’t really dictated by the market so much as decided upon by the Public Utilities Commission — a body which has proven ill-equipped to regulate the state’s solar markets.
Specifically, the PUC changed what’s called net metering at the behest of the legislature. Essentially, with rooftop solar, you could sell back any extra power you produced back to the utility dollar-for-dollar. This is largely what made the initial investment in rooftop solar — which could often cost tens of thousands of dollars upfront— worth it.
Last December, the PUC slashed the rate at which rooftop solar producers are paid by NV Energy by 75 percent. It was this decision that destroyed the market for rooftop solar in Nevada while protecting the profits of NV Energy.
NV Energy and its owner, Berkshire Hathaway (thus, by extension, Warren Buffett), have said that the old net metering rules negatively impacted normal customers because they essentially subsidized rooftop solar users who only number in the thousands. They also claim that it would be cheaper for everyone if NV Energy built large power plants, and then sell that solar power to everyone.
“We do not want our million-plus customers that do not have solar to be buying solar at 10.5 cents when we could turn it out for them for 4.5 cents,” Buffett said in a February interview with CNBC.
Now, it’s not as though Buffett is wrong when he says this, but we have to look honestly at Buffett’s stake in all this. He is the CEO of Berkshire Hathaway, which paid $5.6 billion in 2013 for Nevada’s largest utility. It is in his own best interest to minimize competition here in Nevada because Berkshire Hathaway is not in the business of losing money.
On the other hand, it’s not as though the pro-solar side of the debate is a grassroots campaign. Billionaire Elon Musk is chairman of Solar City and the Las Vegas Sands Corp., run by billionaire Sheldon Adelson, has put up $675,000 for the pro-Question 3 committee Nevadans for Affordable, Clean Energy Choices, according to the website Ballotpedia.
There is also a larger question over the nature of deregulation in the energy sector — something that’s attributed to as the cause of California’s energy crisis in 2000 and 2001. Fears over deregulation may be overblown these days, simply because the Federal Energy Regulatory Commission is stronger than it was in the Enron-era. As veteran Nevada political journalist Jon Ralston put it, “Even with deregulation, there is still … regulation.”
Energy policy is, by nature, uninteresting to the casual college student. Living in dorms or small apartments, energy costs are usually pretty low and therefore pale in comparison to other bills like tuition, rent or even the internet.
It’s also massively complex, and what’s been mentioned here only scratches the surface. But that doesn’t mean the future of energy policy isn’t important. For Nevada, that future could include renewable energy — an industry that could be a boon for both the environment and the local economy. However, NV Energy has shown that if it maintains its vise grip on the energy grid, that future may never materialize.
The Nevada Sagebrush Editorial Board can be reached at email@example.com and on Twitter @TheSagebrush.