United States: Major Legislative Changes To Nevada's Energy Laws

The 2019 Legislative Session concluded with the passage of a series of new laws affecting Nevada's electricity providers and their customers. The proponents of these new laws promise that they will move Nevada toward a clean energy and low carbon fu¬ture, and will result in a stronger and more diversified economy. Below is a summary of three important energy bills signed into law by Governor Sisolak in 2019.

SB 358: Increase in Nevada's Renewable Portfolio Standard

providers to have a certain percentage of their energy sup¬ply come from renewable energy sources such as biomass, geothermal, wind, hydropower and solar. Electricity providers meet the RPS by gaining Portfolio Energy Credits ("PEC's") for their production or purchase of renewable energy, and excess PEC's can be sold to other entities required to meet the RPS. Prior to the passage of SB 358, all Nevada electricity providers were required to have at least 20 percent of their energy supply come from renewable energy sources through 2019, with an increases to 22 percent in 2020 and 25 percentt in 2025.

SB 358 now requires Nevada to double its RPS to 50 percent by 2030. The proponents of SB 358 argued that its passage will reduce air pollution, provide stable growth in renewable energy resources in Nevada, decreasing renewable energy costs for utilities and ratepayers. SB 358 will now require large custom¬ers that have gone through the process to leave NV Energy to meet the same RPS requirements.

During the November 2018 general election, Question 6, a ballot measure that would enshrine a 50 percent RPS in the Ne¬vada Constitution, passed with 59 percent of the vote. Question 6 must be approved twice by the voters, so it will appear again on the 2020 ballot. If Question 6 is approved by the voters again in 2020, any weakening of Nevada's RPS standard would have to be approved by the voters.

SB 547: Changes to the Exit Process

Since 2001, Nevada law has allowed the PUCN to approve large electricity consumers to leave (or "exit") the public utility that services their location and purchase their electricity from other electricity providers. This process requires the PUCN to determine an exit fee, which is meant to compensate the ratepay¬ers that remain within the utility's system. SB 547 provides the PUCN with additional criteria to consider before they approve an exit application and it will allow the PUCN to establish limits on the amount of electricity exiting businesses may purchase from sources other than NV Energy. In addition to making changes to the PUCN exit process, SB 547 also requires electricity producers that sell to businesses that have exited the system to first receive approval from the PUCN. The proponents of SB 547 argued that the existing exit process was not meant to allow all large energy consumers to exit, and that the current process does not ade¬quately protect Nevada ratepayers who are unable take advan¬tage of the exit process.

SB 300: Alternative Ratemaking for Electric Utilities

In Nevada, electric rates that are paid by customers are set ev¬ery three years by the PUCN. Traditionally, electric rates are based on the electric utility's costs to provide service, which includes its operational costs, taxes, depreciation of its facilities and an autho¬rized rate of return for the utility's shareholders. SB 300 authorizes the PUCN to adopt "alternative ratemaking," which allows the PUCN to be more flexible and responsive to changes in the electric market when setting rates. Alternative ratemaking can allow for criteria such as a utility's service performance, profit sharing with customers and automatic adjustments in order to keep the utility's profit margins at an approved level. Proponents of SB 300 argued to legislators that alternative ratemaking will allow electric utilities to promote con¬sumer centered initiatives as part of its rate plans that are difficult to capture in the traditional ratemaking approach.

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