Bill’s clause makes power-purchase agreements private

When it comes to the cost of green power, renewable-energy developers seem to want to keep Nevada ratepayers in the dark.

A bill rushed through the Legislature in the wee hours Tuesday contains a clause that makes power-purchase agreements between utilities and renewable-power developers confidential, and bars the Public Utilities Commission of Nevada from making the terms public unless the contract’s parties agree or a court orders disclosure.

Consumer representatives say the law would harm electric ratepayers, while one bill sponsor said it would protect consumers from higher power rates.

State consumer advocate Eric Witkoski said consumers wouldn’t see how much they’d pay for electricity from a green-power project before the commission approves a purchasing contract, and that’s a bad idea.

“Confidentiality of price and terms is very concerning,” Witkoski said. “A basic tenet of rate-making is that consumers who must pay a monopoly provider for service should be able to know what makes up the costs that the public is being asked to pay. Under this bill, consumers cannot be told what the price and terms are of a purchase-power contract that the utility enters into unless the company and the contracting power agree to tell them. In other words, customers cannot be told how much they are paying for purchased power, including renewable contracts for power.”

Sen. Mike Schneider, D-Las Vegas, and a cosponsor of the legislation, said he didn’t know which companies asked lawmakers for the clause, but he said they were renewable developers, including solar, geothermal and wind companies in Northern Nevada.

He said NV Energy, which buys renewable power from developers, wasn’t involved in the confidentiality provision.

Schneider said the bill wasn’t designed to prohibit consumers from knowing purchase prices. Rather, its intent was to protect financial information developers could use to negotiate power prices upward. In that sense, it actually protects ratepayers from rising bills, he said.

Ratepayers seeking information can still file lawsuits, he said.

Sen. Sheila Leslie, D-Reno, another cosponsor, said in an email that she didn’t know which companies wanted confidentiality, and that she was just hearing about the provision “as it comes out in the media.”

The third cosponsor, Senate Majority Leader Steven Horsford, D-Las Vegas, could not be reached for comment.

The confidentiality clause takes up one paragraph buried deep in a 25-page amendment to Assembly Bill 416, which relates to renewable-energy incentive programs and a transmission line NV Energy wants to build to export green power to California. The bill passed the Senate in a 16-5 vote with 21 minutes left in the legislative session, which ended Tuesday at 1 a.m.

Nevada law requires NV Energy to get 25 percent of its power from renewable sources by 2025. The utility got 10.5 percent of its electricity from green sources in 2009, the most recent year available.

Witkoski noted that prices for power from renewable sources such as the sun, geothermal hot spots and wind are significantly higher than costs for fossil-fuel generation.

Indeed, figures released by NV Energy in July 2010 showed that green energy costs the utility two to three times more than natural-gas power purchases.

“Policymakers approve these higher prices in order to help the renewable industry get established,” Witkoski said. “All of the costs of the renewable contracts are eventually borne by utility ratepayers. When ratepayers are paying higher-than-normal prices for energy, they should be able to know how much of a premium they are paying to help the renewable industry get established.”

Keeping rates low is just as important as informing ratepayers, Schneider said.

“A solar generation plant is going to charge (NV Energy) so much, while another plant a little further down the street will charge them so much. They’re negotiating. I understand that,” Schneider said. “But if you (buy it from) one guy for a penny and a half, and from the next guy for 2.1 cents, you don’t want the other guy to know he just got hosed.”

Witkoski countered that disclosure reduces costs as it “puts pressure on bidders to make competitive bids.”

Schneider said legislators could change the law in their next session, in 18 months, if it proves harmful. He added that PUC members serve at the will of Gov. Brian Sandoval, and can be replaced if they make bad decisions.

A better system would be to keep ratepayers informed, Witkoski said.

“An open and democratic society requires transparency and information so all involved can comment and have input, and so they can make informed choices to direct their lawmakers through voting,” Witkoski said. “If a policy decision is made to require a utility to purchase renewable power through a renewable portfolio requirement, the consumers and voters need to understand the prices and implications of such decisions.”

Tuesday’s amendment comes a year after the Review-Journal asked the PUC to unseal confidential records regarding power-purchase deals between NV Energy and renewable-energy developers.

In June 2010, the Review-Journal requested pricing details on power buys from seven clean-power projects, arguing that consumers had a right to know the cost before PUC approval.

NV Energy officials acknowledged an “important and compelling interest” in disclosing power-purchase details, because those costs “directly and immediately” affect power rates. But utility executives also said disclosure could alter competition and affect future prices.

The commission ruled that contract costs become public when filed for PUC approval and told NV Energy to release pricing details.

The contracts revealed that NV Energy was paying 8.6 cents to 13.5 cents per kilowatt-hour for renewable power, compared with about 4 cents for wholesale power from natural gas.

Contact reporter Jennifer Robison at
jrobison@reviewjournal.com or 702-380-4512.