The simple truth about Question 3

power lines
Power lines near Hoover Dam. Wikimedia Commons photo

“Competition is good,” declares the campaign for Question 3. “It’s that simple”

If Question 3 passes, Nevada will have to create rules and guidelines for energy traders who will parachute into the state to buy electricity wholesale and sell it to you retail. The end result will be many things. “Simple” won’t be one of them.

If the deregulation experience elsewhere is any indication, you’ll be choosing among hundreds of complex plans, each loaded up with a dizzying array of variables, triggers and conditions. Consumers won’t be comparison shopping. They’ll be taking a shot in the dark. People will wonder why buying electricity plans can’t be as simple as buying health coverage on the Affordable Care Act state insurance exchanges. That’s how simple deregulated electricity will be.

Texas has had 16 years to figure out energy “choice,” having deregulated its electricity market in 2002. If voters approve Question 3, Nevada will have to set up a consumer purchasing and protection infrastructure all its own. But in the meantime, if you’d like to get some idea of what might be in store under Question 3, go to PowerToChoose.org, the electricity purchasing portal established by the Texas Utilities Commission, where you can ”Compare offers and choose the electric plan that’s right for you.”

To test, I punched in a moderate-income zip code in the Dallas metro area.

“293 plans found,” the website said.

Fortunately, there was a button that said “Need help? Answer 3 simple questions.” Needing help, I clicked it.

The first question asked about energy use. I selected 1,000 kilowatt hours per month, just a tad more than the U.S. household average.

The second question asked what kind of rate I wanted. The options were:

  • Fixed rate. This promises to be your most stable pricing, “but if market prices fall you may have to wait until your contract ends to enjoy a lower price.”
  • Indexed rate: You’re rolling the dice. “The rates for these plans are directly tied to a pricing formula connected to a publicly available index. If the index rises, your monthly rate will also, but if the index falls, your rates will be lower.”
  • Variable rate: They should call this the Dirty Harry rate. “Your rate can go up or down based on the market and the discretion of your electric company. Variable plans allow customers to benefit from falling market prices, but they also have an increased risk for higher rates if electricity prices spike due to natural disasters, cold winters, or adverse market conditions.” Do you feel lucky punk? Well, do ya?

Already intimidated and yet at the same time mind-numbingly bored by shopping for electricity, I chose a fixed rate. The third question asked about length of term, and I said six-to-12 months, because why not.

texas
Sample of Texas energy plans from powertochoose.org

That narrowed down my choices to only … 169 plans.

The featured prices — let’s call them sticker prices — ranged from less than a nickel per kilowatt hour to nearly a quarter. Choice!

But, again, it’s not that simple. Dave Lieber, a consumer affairs columnist for the Dallas Morning News, wrote last month (16 years after Texas adopted deregulation) that the plans are rife with confusion, hidden fees, and traps to catch consumers unawares and steeply raise their rates for failing to meet some fine-print condition or other. “The system is rigged against consumers,” Lieber wrote. “Only the most mathematically-inclined customers willing to spend much time shopping, probing and creating spread sheets can figure out the best deals. For the rest of us, confusion leads to overpaying for electricity.”

Texas is only one example. There are a handful of other states that have also deregulated. But come on, when Question 3 backers say “competition is good…it’s that simple” who does that sound like if not Texans?

And given a chance to create a fair, elegant, consumer-friendly — and simple — energy purchasing program, or a business-friendly but consumer-hostile procedural nightmare, seriously, which direction do you think official Nevada will go?

The Nevada customers who will benefit from Question 3 will be the customers who are willing to spend time analyzing energy prices, which is to say big businesses like Switch and Las Vegas Sands, Question 3’s sponsors, that can afford to hire somebody to do that for them. Maybe such big business customers will even get into some fancy-pants micro-second-by-micro-second electronic electricity day-trading. Maybe they’ll even get into selling electricity themselves, or in Switch’s case, generating and selling electricity, since Switch and its founder Rob Roy are building “the largest solar power project in the United States.”

Look, I get it. There are those among you (and you know who you are) who welcome the challenge of puzzling out the cheapest retail electricity plan for you. You are nerds. And that’s OK!

Most of us would rather do something — anything — else.

According to the U.S. Energy Information Administration — that’d be your federal energy number-crunching shop — residential electricity prices in Nevada are 4 percent cheaper than the national average. Not great, but not horrible. And probably not so dire as to demand a state constitutional amendment (which is what Question 3 is) compelling everyone to spend a bunch of time with yet another stupidly complicated thing on the internet — especially since it’s effectively impossible to predict whether Question 3 will raise or lower rates overall, as the Guinn Center recently reported.

Meantime, while Nevada residential prices are 4 percent lower than the national average, Nevada commercial power prices are 26 percent lower than the national average.

If Rob Roy and Sheldon Adelson are so concerned about Nevadans paying too darned much for electricity, instead of spending tens of millions of dollars to get their deregulation scheme into the state constitution, they should bankroll a public education campaign demanding more fairly structured Nevada rates so that large customers shoulder more of the burden, and apartment dwellers less.

Roy and Adelson could still publicly and rhetorically stick it to the state Public Utility Commission and NV Energy — evidently a hot priority for both billionaires. But more importantly, shifting more energy costs to commercial users and away from residential consumers, by regulation, would be a much surer way to lower energy costs paid by average Nevadans.

But lowering costs paid by average Nevadans is not what Question 3 is about. Question 3 is about allowing corporations to game the electricity market to save themselves millions of dollars. And if everybody else is left behind, stuck with confusion and higher bills? Tough. Corporations aren’t in business to protect consumers. Corporations are in business to make as much money as they possibly can.

It’s that simple.

Hugh Jackson
Editor | Hugh Jackson has been writing about Nevada policy and politics for more than 20 years. He was editor of the Las Vegas Business Press, senior editor at the Las Vegas CityLife weekly newspaper, daily political commentator on the Las Vegas NBC affiliate, and wrote the then-groundbreaking Las Vegas Gleaner, which among other things was the only independent political blog from Nevada that was credentialed at the 2008 Democratic National Convention. He spent a few years as a senior energy and environmental policy analyst for Public Citizen, and has occasionally worked as a consultant on mining, taxation, education and other issues for Nevada labor and public interest organizations. His freelance work has been published in outlets ranging from the Guardian to Desert Companion to In These Times to the Oil & Gas Journal. For several years he also taught U.S. History courses at UNLV. Prior to moving to Las Vegas, he was a reporter and then assistant managing editor at the Casper Star-Tribune, Wyoming’s largest newspaper.

6 COMMENTS

  1. A key [EIA] datapoint about Texas is that, for all 16 years of deregulation, households in the “competitive” market (e.g. Houston, DFW) have consistently paid _higher_ average electricity prices than those in the still-regulated areas (e.g. San Antonio, Austin). Not because better rates aren’t available, but because deregulation shifted the procurement burden from a single PUC to millions of uninformed consumers, while simultaneously pitting them against savvy, for-profit retailers in a game where rate gimmicks and deception are the main form of product differentiation.

  2. You intentionally omit a major part of the story, because it does not fit your narrative: NV Energy, the backers of of No on 3 (they are spending $30MIL) is a billionaire’s corporation with a cadre of lobbyists and consultants whose primary job is to ensure profitability over consumers. They have overcharged Nevadans, and the school district, for years, and they killed rooftop solar, because, profit. That’s why 72% of everyday Nevadans voted for Choice in 2016 and why over 1,000 small businesses and 700K+ Nevadans support Choice today.

    You think you shouldn’t be bothered to shop around for what many of us consider to be a major household expense, especially in the sweltering Las Vegas summer. You’re showing your privilege. The legislature and PUCN will work to ensure consumers have clear, easy to understand choices and eliminate deceptive marketing practices. Why do I believe this? Well…

    The Governor’s Task Force on Energy Choice had a lot to say about consumer protections and fair and transparent marketing practices, I believe there were at least 26 recommendations. The Task Force included legislators which you presume incapable of doing their jobs to pass some laws that will shape the design of a well-regulated competitive market. You sound like a chicken little when you presume that Nevada is incapable of doing the right thing by consumers. The current legislature is very progressive, and they will ensure consumer protections.

    • Very well written and factual, unfortunately the left has picked up on this story and has pushed into full swing. We have a strong Blue State, capitalism and free enterprise does not stand a chance.

  3. Also, and I have firsthand experience of this, in every legislative session over the past 20 years, clean energy and consumer advocates have fought NV Energy and its massive cadre of lobbyists to get even the smallest victories for Nevadans. Take the power away from NV Energy (again, pardon the pun) and give Nevadans a voice about their energy future— a future that should and will lead to more innovation, cleaner energy choices, and lower power bills.

  4. The Bell Ststem deregulated years ago. I remember the arguments. I am glad they did. The phones today are more expensive and it is complicated but I wouldn’t trade my IPhone for a Trimline. Capitalism in theory calls for competition. I don’t want one company in control of the inevitable renewable energy technology.

LEAVE A REPLY

Please enter your comment!
Please enter your name here