“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.
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.