Major Legislative Changes to Nevada’s Energy Laws Legal Opinion Nevada... · 2019. 10. 8. ·...

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36 NEVADABUSINESS.COMNEVADA BUSINESS MAGAZINE OCTOBER 2019

Josh M.Reid

Lewis Roca Rothgerber Christie, lrrc.com

The2019LegislativeSessionconcludedwiththepassageofaseriesofnewlawsaffectingNevada’selectricityprovidersandtheir customers. The proponents of these new laws promise that they will move Nevada toward a clean energy and low carbon fu-ture,andwillresultinastrongerandmorediversifiedeconomy.Below is a summary of three important energy bills signed into lawbyGovernorSisolakin2019.

SB 358: Increase in Nevada’s Renewable Portfolio Standard ARenewablePortfolioStandard (“RPS”) requireselectric-ity providers to have a certain percentage of their energy sup-ply come from renewable energy sources such as biomass, geothermal, wind, hydropower and solar. Electricity providers meettheRPSbygainingPortfolioEnergyCredits(“PEC’s”)fortheir production or purchase of renewable energy, and excess PEC’s can be sold to other entities required to meet the RPS. PriortothepassageofSB358,allNevadaelectricityproviderswere required to have at least 20 percent of their energy supply come from renewable energy sources through 2019, with anincreasesto22percentin2020and25percenttin2025. SB358nowrequiresNevadatodoubleitsRPSto50percentby2030.TheproponentsofSB358arguedthatitspassagewillreduce air pollution, provide stable growth in renewable energy resources in Nevada, decreasing renewable energy costs for utilitiesandratepayers.SB358willnowrequirelargecustom-ers that have gone through the process to leave NV Energy to meet the same RPS requirements. During theNovember 2018 general election,Question 6, aballotmeasurethatwouldenshrinea50percentRPSintheNe-vadaConstitution,passedwith59percentofthevote.Question6mustbeapprovedtwicebythevoters,soitwillappearagainonthe2020ballot.IfQuestion6isapprovedbythevotersagainin 2020, any weakening of Nevada’s RPS standard would have to be approved by the voters.

SB 547: Changes to the Exit Process Since 2001, Nevada law has allowed the PUCN to approvelarge electricity consumers to leave (or “exit”) the public utilitythat services their location and purchase their electricity from other electricity providers. This process requires the PUCN to determine an exit fee, which is meant to compensate the ratepay-ers that remainwithin theutility’s system.SB547provides thePUCN with additional criteria to consider before they approve an exit application and it will allow the PUCN to establish limits on the amount of electricity exiting businesses may purchase from sources other than NV Energy. In addition to making changes to thePUCNexitprocess,SB547alsorequireselectricityproducersthatselltobusinessesthathaveexitedthesystemtofirstreceiveapprovalfromthePUCN.TheproponentsofSB547arguedthatthe existing exit process was not meant to allow all large energy consumers to exit, and that the current process does not ade-quately protect Nevada ratepayers who are unable take advan-tage of the exit process.

SB 300: Alternative Ratemaking for Electric Utilities In Nevada, electric rates that are paid by customers are set ev-ery three years by the PUCN. Traditionally, electric rates are based on the electric utility’s costs to provide service, which includes its operational costs, taxes, depreciation of its facilities and an autho-rizedrateofreturnfortheutility’sshareholders.SB300authorizesthe PUCN to adopt “alternative ratemaking,” which allows the PUCN tobemoreflexibleandresponsivetochangesintheelectricmarketwhen setting rates. Alternative ratemaking can allow for criteria such asautility’sserviceperformance,profitsharingwithcustomersandautomaticadjustmentsinordertokeeptheutility’sprofitmarginsatan approved level. Proponents of SB 300 argued to legislators that alternative ratemaking will allow electric utilities to promote con-sumercenteredinitiativesaspartofitsrateplansthataredifficulttocapture in the traditional ratemaking approach.

Major Legislative Changes to Nevada’s Energy LawsBy: Josh M. Reid, Partner, Lewis Roca Rothgerber Christie

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37OCTOBER 2019 NEVADA BUSINESS MAGAZINE

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