First NV gas plant in 15 years gets expedited approval, customers likely to get the bill
Clean energy groups say the tight timeline limits their ability to challenge whether or not a gas plant is the best and lowest-cost option for ratepayers. (Photo: Ronda Churchill)
Nevada regulators have approved an NV Energy plan to build a natural gas-fired power plant they say will help address system reliability as weather grows more extreme and unpredictable across the region.
The energy monopoly will build a 400 MW gas-fired combustion turbine – or “peaker plant” – on the site of the Silverhawk Generating Station in southern Nevada to cover increasingly volatile seasonal peak demand. The gas plant would be the first built in Nevada in nearly 15 years.
To cover the cost of the plant, NV Energy can include its cost their expenses in a future rate increase after the project is completed. Based on the expected 2024 date of completion, NV Energy could apply for a rate hike for the project by 2026 and bill the rate increase by 2027, under existing regulations.
Peak plants typically only run a few hundred hours of the year – or sometimes even less. Most of the year the plant sits idle and unused. The Silverhawk plant will be allowed to operate up to 700 hours annually.
The plant was given an expedited approval Tuesday from the Public Utilities Commission of Nevada (PUCN)– a regulatory agency responsible for approving utility plans and rates. While the gas dependent peaker plant was not part of NV Energy’s original plan submitted to utility regulators, it was approved as an amendment.
Clean energy groups say the tight timeline limits their ability to challenge whether or not a gas plant is the best and lowest-cost option for ratepayers.
Utility regulators noted they shared concerns about the shortened time frame under which the amendment was evaluated, but chose to approve the plant due to unpredictable energy markets, volatile weather, and supply chain disruptions in recent years.
Advanced Energy United and other advocacy groups testified against NVEnergy’s plan to build the gas-fired plant, arguing that the cost would be passed on to customers. NV Energy estimates the 400 megawatt expansion of the Silverhawk Generating Station would cost $333 million.
“This gas plant is only meant to run a few hundred hours a year, which means it will sit idle most of the time. But Nevadans will be paying for it on their monthly bills for the next 30 years, regardless of whether or not it runs,” said Sarah Steinberg, director at Advanced Energy United.
Unlike rising costs of fuel, which utilities must pass through directly to consumers without adding a mark-up to the price, utilities are allowed to earn a profit from infrastructure investments.
“NV Energy said itself that this option is not least-cost. We are disappointed that the utility did not fully consider other, cleaner solutions, such as energy demand reduction, distributed energy, and storage, that could meet the same need, or even improve reliability and resilience, at lower cost,” Steinberg continued.
Gas plants run on an expensive and volatile fossil fuel, say opponents. NV Energy is already heavily reliant on gas, getting about 72% of its energy from out-of-state natural gas sources. By adding more to the system, it is only increasing its dependence on – and its customers’ exposure to – an unstable market.
Last year, the average cost of wholesale U.S. natural gas was the highest it has been since 2008, according to the U.S. Energy Information Administration.
Natural gas prices have surged over the past two years, costing individual households in Nevada hundreds of additional dollars in heating bills. NV Energy and Southwest Gas have both said that recent higher utility bills are the result of the companies passing on increasing costs of natural gas.
Conservation groups argued the gas-fueled plant runs counter to Nevada’s stated goal of achieving 50% renewable energy by 2030 and zero carbon by 2050.
“We are deeply disappointed in the PUCN’s quick approval of NV Energy’s disastrous proposal to open a new polluting gas plant,” said Estefany Carrasco Gonzalez, Chispa national director. “Worse yet, out-of-control gas prices have already hurt our families’ ability to budget for basic living expenses.”
Peaker plants are also disproportionately located near or in low-income communities and communities of color, exposing families to air and water pollution, according to a recent analysis by Physicians, Scientists, and Engineers for Healthy Energy, a non-profit research institute.
In a draft of the approval, NV Energy said, although the plant will use fossil fuels, “it is not deviating from its clean energy goals and remains committed to Nevada’s sustainability goals.”
The gas-fueled plant will eventually be capable of operating on a 15% hydrogen mixture, according to NV Energy. The original equipment manufacturer is also planning a path towards 100% hydrogen power, said the utility company. However, NV Energy has not prepared a timeline or cost estimate for the plant’s hydrogen potential.
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