Question 3: Energy choice. Does it work?

Electric Rates.png
Electric Rates.png

You probably have just one question: if Question 3 passes, will your electric rates drop?

Its opponents say no.

“Nevada's rates are 17% below the national average currently,” says Tracy Skenandore, the Communications Director for the Coalition to Defeat Question 3.

Its supporters say yes.

“About 14 total states have all chosen to allow their customers to have retail energy choice and they've been very successful,” says Jon Wellinghoff, the former Chairman of the Federal Energy Regulatory Commission, a Question 3 supporter and the point person for The Energy Choice Initiative.

If it passes, Question 3 would end NV Energy’s monopoly as Nevada’s electricity provider and open our market up to outside power providers. It would give state lawmakers until 2023 to build a framework and pass legislation to support a competitive energy market.

In 2016, Nevada voters overwhelming approved energy choice. In order to amend the state constitution it needs to pass in the next election, which is 2018. If it does, Nevada would be the only state that has restructured its energy market through a constitutional amendment. Other states have done it through legislation.

That’s an issue, too, for opponents, who say if Nevada decides that go back to a monopoly model, undoing the amendment could take years. Supporters of 3 say leaving this to legislation would leave lawmakers vulnerable to what they see as NV Energy’s considerable lobbying might and money in Carson City.

As for the economic impact on you, the ratepayer, who’s right?

I called up Meredith Levine, the Director of Economic Policy for the Guinn Center, a non-partisan local think tank. It studied Question 3.

“We have absolutely no idea if you’re rates are going to drop, and that is, again, because of how the legislature implements it, the kind of variables around that – how does natural gas behave? We don’t know how that looks,” she says.

Natural gas, as a dominant commodity used to produce electricity, would play a role because companies coming into the market could pass that cost along to consumers.

Here's the bottom line: around the nation, energy choice has had success and failure.

The 14 states that have it? Ten others dumped it, according to the opposition.

“They found that it led to higher rates, they found that it led to rolling blackouts, they found that there were less consumer protections,” says No on 3’s Skenandore.

That assessment doesn't fly, according to Jon Wellinghoff. “First of all, it’s not risky,” he says.

What will be key, he tells me, is how energy choice is crafted.

“I'm the first to admit it - if you don't do it properly it's not going to work,” he says, adding that state lawmakers will have the benefit of seeing what has worked – and what hasn’t – elsewhere.

“We will have an opportunity to pick the best of those other jurisdictions and create for our consumers in Nevada a system that will protect consumers, keep rates low and ensure that we have maximum amounts of renewable energy in the system,” Wellinghoff says.

But opponents say there is risk that could leave consumers exposed.

“This is deregulation because the Public Utilities Commission of Nevada will not be able to regulate the way they do today, so they won't be able to regulate the rates that these new electricity companies entering the market charge consumers,” says Skenandore.

Wellinghoff disagrees that this would, in fact, be deregulation.

“Let’s be very clear that we’re not deregulating. We’re restructuring the system to go from an economic regulator who sets prices to a market regulator who oversees a market and ensures that consumer protections are in place so that consumers can have a meaningful retail price,” he says.

Another sticking point is renewables. Would solar, geothermal or wind power companies get scared off having to deal with new power providers?

"No" says yes.

"Yes" says no.

And here's another thing to think about, says the Guinn Center’s Levine.

The credit solar customers get for sending power to the grid? “They're effectuated through NV Energy. If NV Energy is out of the generation business, then who sets the rates?” she asks.

Inevitably it would be up to state lawmakers to work out the details if Question 3 passes.

Question 3 has become a contentious battle, pitting NV Energy, which sat on the sidelines in 2016, against Las Vegas Sands and the data company Switch, who support the measure. All three companies have spent millions to either defeat or pass the amendment.