Nevada groups compete to export renewable energy

The race to export renewable energy from Southern Nevada to California is on, with a rural electric co-op and a former Nevada governor vying for the lead.

The stakes are huge: California has an almost insatiable need for green power, with laws requiring utilities to get a third of their electricity from renewables by 2020. Energy companies are jostling with each other to meet the demand, proposing transmission lines that could ship as many as 2,000 megawatts of renewables from Southern Nevada to the Golden State.

Start with Valley Electric Association, a Pahrump-based power co-op with 23,000 members in Nevada and California. Valley Electric wants to join the California Independent System Operator, a nonprofit corporation that manages transmission on 80 percent of the Golden State’s power grid. The idea? To connect Valley Electric’s lines to California’s networks for the transmission of Nevada-generated renewable energy. The operator’s board is set to vote on Valley Electric’s proposal on Wednesday or Thursday, with membership scheduled for January 2013.

Not so fast, says former Nevada Gov. Bob List. List is a principal in Solar Express Transmission, a company that’s roughly two years into federal permitting on a 122-mile power line that would connect the Amargosa Valley north of Pahrump to Southern Nevada substations that send power to California. The company is raising funds now for its line, which would be operational in 2014 or 2015.

Naturally, the competitors don’t see eye to eye.

Valley Electric’s 360 miles of existing transmission lines could begin shipping renewables to California tomorrow, said CEO Tom Husted. Plus, linking to the California system would allow Valley Electric to spread expenses over a larger population base, which would mean lower operating costs for members.

“Our system is already on the ground and in place, with capacity available (to renewable developers),” Husted said. “It’s the lowest-cost alternative for solar generators.”

But it’s not the lowest-cost alternative for Valley Electric members, List said.

Joining the independent system operator would put the association on the hook for a prorated share of $16 billion in California grid improvements. And Valley Electric has applied for rights-of-way for a line that would run the same route as the Solar Express project. The association’s line would likely cost at least $200 million, an amount well beyond any financial commitment it has ever undertaken, List said.

“It’s a huge step that will transform the entire nature of this little co-op,” he said.

It could also put Valley Electric’s assets under control of the California system, List said, something the group can’t do without consent of two-thirds of its members. Husted responded that Valley Electric will continue to own its assets. It’s merely switching operational control from the Western Area Power Administration to the independent system operator. Also, the association hired third-party consultants to study the financial implications of joining the California system and said those analyses showed that members would come out ahead through lower operating costs.

Husted added that List isn’t privy to the association’s financial or business plans. What’s more, he’s dismayed the former governor would use his juice to, well, affect juice transmission.

“His whole motive is to try and do whatever he can to muddy the waters with the transition of Valley Electric into the California ISO,” Husted said. “I will tell you the same thing I’ve told Gov. List: I think it’s a shame that the former governor of the state of Nevada, working for an outside-Nevada company, would hinder the development of a Nevada company owned by members who are citizens of Nevada. His own personal gains are thwarting economic-development expansion within Southern Nevada, and I just think that’s a crying shame.”

List countered that his project would use funds from private developers, rather than putting potential building burdens on ratepayers.

Darrell Lacy, the Nye County executive who oversees renewable-energy development, said the county won’t take sides in the disagreement. Officials just want someone — anyone — to build a line. But Lacy said he wasn’t sure Valley Electric, as a small local cooperative, could build substantial new transmission.

“We’re not trying to pick winners and losers, but we do want to make sure this (Valley Electric) project doesn’t scare off other projects, and then they don’t have the financial wherewithal to build it,” Lacy said. “We just want to make sure somebody does build some transmission here.”

And Valley Electric is the natural choice, said Assemblyman Ed Goedhart, R-Amargosa Valley.

Goedhart works for Ponderosa Dairies, Valley Electric’s biggest customer, in the purchasing and land departments. He said he has confidence that the association’s management team wouldn’t put members on the hook for uncompensated risks. California desperately needs renewable power, and Valley Electric can provide it immediately.

“They’re here on the ground, and have almost a 50-year history for service. They’re owned locally, and not by some big shots on Wall Street. They are people with experience on the ground, who are ready to get partnerships going,” Goedhart said.

Lacy said he hopes there’s room for compromise. He pointed to the 235-mile, 500-kilovolt One Nevada transmission line (ON Line) under construction from Ely to Apex, noting that the project’s co-developers, local power utility NV Energy and New York energy developer LS Power, once proposed two separate, competing lines, only to decide a joint project was better than duking it out among regulatory agencies and financial markets. The $510 million line is scheduled for completion in 2013.

Husted declined to comment on partnership potential, but List seemed game.

“It certainly could be explored. It might be done in such a way that (Valley Electric) members didn’t have all the risks associated with the financing,” he said. “It certainly doesn’t make sense to build two lines. Anything is possible.”

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