By VERNON ROBISON
Moapa Valley Progress
The Overton Power District Board of Directors established an official position on a looming ballot initiative that threatens to bring major changes to the way the OPD has served its community for more than 80 years.
In a meeting held in Mesquite on Wednesday, June 21, the board voted unanimously to lobby for changes to the proposal; changes that would somehow exempt rural power districts and small coops from the measure.
OPD General Manager Mendis Cooper said that he and OPD staffers had been watching the progress of this proposed amendment to the state’s constitution since it came before the voters for the first time last fall.
The initiative appeared on the 2016 ballot as Question 3. Called the “Energy Choice Initiative,” it aimed to break up NV Energy’s monopoly and open the state’s electricity market to more competitors. The measure calls on lawmakers to create a framework for deregulating the state’s electrical market and ending the utility company’s legal monopoly.
The initiative passed in November with 71 percent of the popular vote. In the recent session, the state legislature passed a bill to implement a study of the concept of energy deregulation in the state and its effects which will be ongoing through the 2017-2018 interim. The measure must finally pass a second consecutive popular vote in 2018 before it becomes a constitutional amendment.
Cooper told board members that he had reached a point where it would be difficult for him and OPD staff to stay neutral on the initiative.
“I have had many from different interests that have asked for our support in their position on this issue,” Cooper said. “But I have been reticent about offering support until I receive direction from this board.”
Cooper expressed concerns about unintended negative effects that may occur if the measure is enacted. He pointed out that on the surface the initiative sounds like a good idea. But the details in the language of the measure are troubling; especially to rural entities, he said.
“It is rather poorly written and it is vague in a lot of key areas,” Cooper said. “It seems that it might be very good for large commercial customers and industry but very bad for residential ratepayers.”
Cooper said that, with the vagueness of the language, it was difficult to predict exactly what all the final effects would be. Still, things are rolling forward fast enough that the time had come for OPD to take a position one way or another, he said.
“I just need some direction,” Cooper said. “Do we want to just stay out of the fight and see what happens? Do we want to support it? Or do we want to get involved in slowing it down or making changes to it. I’m not sure that there is a completely right or wrong choice on this one. But the question has to be asked.”
If the district comes out in support of the initiative, there would be little or no cost, Cooper said. With the general public support seeming to be behind the initiative, the district could sit back and allow it all to play out.
If, on the other hand, the board wanted to take a stand in opposition, or work to make material changes, to the measure, then OPD funds might be needed to pay for lobbying efforts.
“One thing is pretty clear, our rural votes will never carry the day on this one,” Cooper said. “This is a matter that will be determined by the urban voters of the state. Even if 100 percent of OPD residents turned out to oppose it, we wouldn’t make enouigh of a difference to stop it.”
But the district could lobby and advocate for changes within the initiative that would leave OPD and other rural utility groups whole in the process, Cooper said.
During the following discussion, board members had many questions about how the proposition would affect the district.
Cooper explained that, after deregulation, energy customers would be able to choose from a menu of different energy providers. Going to an online list, they could select the energy plan that they felt would best fit their household need.
While an attractive concept at first sight, it becomes more complex in less populated rural areas of the state, Cooper said. Entities like OPD would likely find some of their key customers at risk in a competitive environment, he said.
The key customer block most at risk would be large commercial customers, Cooper said. These large companies were important because they reliably purchase large blocks of energy. They have predictable loads so it is easy for the district to schedule that power block in its purchase agreement.
Residential households, on the other hand, are more difficult to predict, Cooper said. They are less reliable in the load required. And so it is more difficult to economically make a purchase agreement on the energy needed.
“In a smaller scale rural economy, you need the larger commercial customers to spread the costs of the residential customers out and keep rates lower for everyone,” Cooper said.
The risk in the Energy Choice Initiative is that it would bring competing providers which would target just those prime commercial customers. “Those commercial customers would get the best offers outside of what we can give,” Cooper said. “That could skim off our most economical customer segment and force us to have to absorb a lot of the high costs into a relatively few residential customers. Rates would go up significantly.”
Another risk to existing rural providers would be a conundrum created by a lack of clarity in the initiative, Cooper said. According to the initiative, the OPD would be forced to choose between two options. Firstly, it could continue on as a full provider as it is now. But it would have to compete for customers in a much smaller economy than most. This would be difficult in view of the above scenario.
The other option would be for the district to scale way back and become, what Cooper called, a ‘wires only company.’ ‘Wires only’ means that the district would get out of the power purchase and supply business. Rather it’s only function would be to deliver power from the new providers’ sources to the customers through its transmission and distribution systems.
But that second option would raise significant questions, Cooper said. For example, the district just entered a 50 year contract extension on its Hoover Dam hydro-power allocation. The district has held this prime resource since it was formed in 1935. And it has been a key component in keeping rates relatively low for OPD customers. If the OPD was unable to compete in the new unregulated market and had to take the ‘wires only’ option, it could not continue to administer that hydro resource, according to the initiative.
“If we are ‘wires only’ we can’t sell power or have any generation at all,” Cooper said. “The state would say that we can’t have that 50 year contract. And if the community lost that hydro-power, we would never, ever get it back.”
Cooper asked board members what the general feeling was about OPD becoming a ‘wires only’ company.
“I don’t see our mission as a ‘wires only’ operation,” said Mesquite board member Mike Young. “The reason the district was established was to provide a full service to our rural customers. That has always been our mission.”
Young said that the best outcome to the Energy Choice measure would be in pushing for an arrangement whereby rural districts and small co-ops could opt out of the initiative altogether.
At-large board member Judy Metz agreed. “I think that we need to align with other entities throughout the state, as well as bigger companies in Las Vegas or Reno to try to move opinion on this and change the policy,” Metz said.
OPD attorney Byron Mills reminded board members that the district could not legally make campaign contribution to try to influence the 2018 election on the measure. But it could certainly hire a lobbyist to craft and focus the language and intent of the initiative to protect rural utilities.
Cooper said that the time window for making such changes was still open. But with the 2018 election cycle fast approaching, it was closing fast.
“I think we want to be at the table when the key decisions are being made on this,” Cooper said. “But in order to do that I need a position to hold on behalf of OPD.”
Cooper added he had engaged in conversation with representatives of the Las Vegas data center giant, SWITCH; which was one of the initiators of the Energy Choice measure.
“They said that there was never an intent to include the rural entities in the initiative,” Cooper said. “Of course, that may be true, but it is not the way it is worded in the initiative.”
Board members felt that they needed to be more educated on the details of the initiative and its possible effects. Moapa Board member Chad Leavitt suggested a need to try to educate OPD customers in these matters to help bring voters up to speed. Young suggested that the board hold a workshop session where questions could be answered, experts brought in and details hashed out.
“We need to get up to speed on it,” Young said. “The responsible party is us to represent our customers. We need to become knowledgeable about this issue.”
Cooper agreed, but said that, given the vagueness in the language of the measure, there was still a lot that was unknown regarding the effects that would be felt.
“The answers will eventually come out, but by the time we get all of them it might be too late,” Cooper said. “By early 2018, the die may already be cast.”
Bunkerville trustee Bob Bunker made the motion to instruct staff to take a position on the Energy Choice Initiative. That position would include: 1.) working toward the initiative not being passed in the election; 2.) including a size limit in the measure which would leave rural utility entities out of it entirely; or 3.) working to carve the OPD out of the initiative altogether. Bunker’s motion also instructed the district’s lobbyist to work toward these aims. Finally, the motion instructs staff to invite experts and allies to future board meetings to educate the board on the issues around Energy Choice.
The motion was adopted with a unanimous vote of the board.
