Early in this century a majority of Clark County voters wanted to own the Clark Generating Station near Henderson. (Photo: Hugh Jackson/Nevada Current)
NV Energy customers are paying more for electricity than ratepayers in any of the mountain states. But in pockets of Nevada where electric utilities are publicly owned and operated, customers are paying a fraction of their big city counterparts.
In Boulder City, just 30 miles south of Las Vegas, the average power bill for a 1,500 square foot home using 1,100 kilowatt hours (kWh) a month is $110. The same usage would cost an NV Energy customer in Southern Nevada $196, according to a study recently completed by Boulder City.
“We’re not motivated by profit,” says Joe Stubitz, director of utilities in Boulder City, where municipal power came with the city’s creation as a camp for workers constructing Boulder Dam. “And we have very little debt.”
Public power generates 10% of all electricity in the U.S., according to the American Public Power Association (APPA). One in seven Americans are served by a public power utility.
Public power is not only cheaper than investor-owned power, but cleaner, too, according to the APPA.The.U.S. Energy Information Administration says in 2019 about 40% of public power came from non-carbon emitting sources. By comparison, NV Energy is challenged to provide 50% of its energy from renewable sources by 2030.
“Homes and businesses in 2,000 communities across the U.S. — large cities like Austin, Nashville, Los Angeles, and Seattle, as well as small towns and the Navajo nation — get electricity from a public power utility,” says the APPA’s website. “Collectively, these utilities serve 1 in 7 electricity customers across the U.S. and operate in 49 states — all except Hawaii — and the territories of American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.”
Public power alone does not guarantee lower electricity rates.
Customers of Los Angeles’ municipal utility pay as much as .28 cents per kWh, about .12 cents higher than NV Energy’s rates. However, off-peak time plans offer rates of less than .20 cents per hour for customers who can avoid usage during peak periods.
By comparison, San Diego’s investor-owned utility charges customers the highest electricity rates in the nation at .47 cents per kWh, according to the Department of Labor. Experts say that’s because of San Diego Gas & Electric’s service area, which is much smaller than other investor-owned utilities in the state. Additionally, San Diego has the highest adoption rate of rooftop solar in California. Rooftop solar owners pay less toward maintaining the grid, leaving ratepayers with bundled service to subsidize the cost.
Boulder City, given its role in Lake Mead’s formation, receives more than half of its energy from federal hydroelectric power generated by Boulder Dam. But even that is becoming more costly.
“Eventually hydroelectric will be more expensive than some of our other fixed power. As the capacity of the lake goes down, the cost of the power goes up, relative to the power that we get,” says Stubitz.
In addition to Boulder City, Nevadans have public electricity in Nye County, Humboldt County (from a cooperative headquartered in Oregon), Lincoln County, Eureka, parts of Washoe County, as well as the northeast parts of Clark County, including Moapa, Overton, Glendale and Mesquite.
Power to the people
Nevada law is replete with provisions allowing for municipalities to convert to public power, including by purchasing existing utilities, but they have not been exploited by the state’s largest counties.
Chris Giunchigliani, a former legislator, Clark County commissioner and Democratic gubernatorial primary candidate, attributes inaction on public power to term limits and a lack of institutional knowledge among public officials. State lawmakers are limited to serving 12 years in each house.
“There’s not been a conversation, community-wise, to educate everybody about what has happened, what has been proposed, what was rejected, and what is the goal,” she says. “I don’t mean to say it’s just term limits, but with the turnover, none of these people know the history of this stuff.”
“The devil is in the details,” Clark County Commissioner Marilyn Kirkpatrick, also a former state lawmaker, said via text. “I would be worried that infrastructure would be a big problem initially and ongoing. That cost is huge.”
Public power infrastructure projects are often funded through tax-exempt municipal bonds. Interest is returned to the utility or the ratepayers, depending on the public structure.
Nevada Revised Statute 710.160, codified in 1923, allows a county, after receiving a petition from two-thirds of taxpayers, to “purchase, acquire or construct electrical power plants and power lines within the limits of the county and thereafter operate, maintain and extend the same as a public utility.”
NRS 710.170 allows a county to “purchase any existing light line and power line or integral part thereof, upon the most advantageous price and terms to the county.”
But given the ability of legislators to tweak the law, even temporarily, as they did in 2001, it’s unlikely Warren Buffett, owner of NV Energy parent Berkshire Hathaway Energy, is losing any sleep over his assets in the Silver State.
In 2002, Clark County and the Southern Nevada Water Authority (SNWA), one of the largest electricity users in the state, proposed a $3.2 billion buyout of Nevada Power, the electric utility in the south. The offer designated $1.2 billion for assets and $2 billion for debt.
“I don’t think the rates would be what they are today if we’d succeeded,” says former SNWA general manager Pat Mulroy, known for her ‘water at all costs’ style of management, which included buying water rights from ranchers along the eastern border of the state and a plan for constructing a massive pipeline to Las Vegas. “If you take a for profit company and convert it to municipal, two things change instantly. You become a not-for-profit, so shareholder returns and profit margins no longer play a part. You could take all that debt, refinance it, and not pay federal taxes. Those factors alone instantly knock your power bill down by 20%.”
The county and SNWA hired Morgan Stanley to come up with an offer.
“Remember, their stock had cratered to about $3. They’d lost so much that there was a number between their old value and the crashed value that the shareholders would have taken,” Mulroy says.
But in 2001 the Legislature put a law in effect for two years prohibiting the county from buying the utility. Nevada Power filed suit in the Nevada Supreme Court alleging the county was violating the law when it placed an advisory question on the ballot. The court declined to intervene.
“Should the Nevada Legislature take appropriate action to enable the electrical energy provider for Southern Nevada to be a locally controlled not for profit public utility?” the question asked.
Opponents, against the backdrop of recent rolling blackouts in California and Gov. Kenny Guinn’s about-face on power deregulation, attempted to capitalize on concerns about cost and reliability.
“Make no mistake—“not for profit agency” means a government-run utility. Do you want bigger government? Do you really believe a government-run utility assures lower costs?” said the argument against passage, which noted Nevada Power provided reliable service to Las Vegas for “over 95 years.”
“Nevada Power was acquired by Sierra Pacific Resources three years ago,” said the rebuttal. “Subsequently, Nevada Power has raised rates more than ten times and paid millions in generous severance packages to departing executives. This is not the same Nevada Power that operated in Nevada for the previous 92 years.”
The ballot measure passed with 57.42% voting yes.
“We won that vote and then the Legislature never took it up because NV Energy had greased their palms. They are the master of the inside game,” says Mulroy, adding that R&R Partners, a well-connected lobbying firm, “has represented them forever.”
Sen. Joe Neal, a Democrat, introduced a bill to essentially end the prohibition on the county’s purchase of Nevada Power, but Senate Commerce and Labor chairman Randolph Townsend, a Republican, refused to hear the measure, and issued a statement saying it was “important for us to now provide Nevada Power and Sierra Pacific with the tools and support to succeed in order to re-emerge from this difficult period stronger and better prepared to meet their future obligations.”
“I’ll give Pat credit,” says Tom Collins, a former Nevada Power lineman and state lawmaker who voted in 2001 to ban the county from buying the utility. “She’s smarter than anybody, but the Water Authority would not have run the power company any better than the folks at Nevada Power.”
Ironically, the county’s offer may have saved Nevada Power, whose shares were trading at around $3, from a hostile takeover, according to Mulroy. “Because they had fallen so far in value, it would not have taken much for somebody to come in, in a hostile takeover environment and assume control of the company. No one could compete with our offer.”
Mulroy says she’s doubtful a government purchase of NV Energy would succeed today. “I don’t think it’s ever going to happen because it’s going to take legislative action as long as they have the franchise.”
NV Energy declined to comment for this story.
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