Energy Choice
                            

Matters

Nevada Gov. Energy Choice Working Group Recommendations:

PUC Should Address Resource Adequacy Through Current Integrated Resource Planning Until Organized, Competitive Market Established By *Legislature*

Retail Market Participation Should Be "Condition[ed]" On Retail Offerings That "Align" With State Goals Of Renewables, Energy Efficiency

Retail Choice Should Be Implemented In Manner That "Do[es] Not Harm" Current Programs For Subsidized Services For Low-Income Customers

March 8, 2018

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Several working groups organized under the Nevada Governor's Committee on Energy Choice yesterday presented reports to the Committee with recommendations on various aspects of energy choice

The Committee took the working group reports under consideration, and did not make any formal findings or adopt any recommendations as those of the Committee itself during yesterday's meeting.

The Technical Working Group on Generation, Transmission and Delivery presented a draft report with the following recommendations:

• "The PUCN [Nevada PUC] should continue to address Resource Adequacy and Planning Reserve requirements through the existing Integrated Resource Planning Process until an organized open competitive market is established by the Legislature."

• "NV Energy should identify must-run generation units and provide multiple options to eliminate the condition(s) giving rise to the must run status along with the estimated cost and time frame for implementation of each option provided." Construction costs should be recovered through ratepayers.

• "Transmission import and export capacity will need to be studied to see if additional expansion is necessary to join a wholesale market such as CAISO or SPP."

The Generation Technical Working Group's draft report also included the following findings of note:

• "The decision on what organized wholesale market Nevada will participate in must be made several years in advance of the effective date of Energy Choice in order to provide time for the organized wholesale market to prepare for and adjust its resource mix for Nevada, or for Nevada to construct additional generation should Nevada elect to create its own organized wholesale market."

• "Resource adequacy issues in Nevada will be further exacerbated by generation units or purchased power agreements that are not marketable for various reasons including contract terms, cost of generation or age of generating units. NV Energy currently has approximately 6,011 MW of owned generation and 2,930.5 MW in purchased power agreements (including pre-commercial agreements). The two primary electric energy trading hubs available for Nevada markets are COB and Mead. The trading hubs serve as a proxy as to current competitive wholesale markets in the region. Generation assets held by NV Energy with bus bar costs above these trading hub prices or purchased power agreements (PPAs) with pricing above these hubs may be difficult to liquidate and will further add to Nevada’s resource adequacy issues in the short term. Current pricing at Mead follows in the below table. Of the 61 PPAs identified by NV Energy, all but the Kingston, Mill Creek, Newmont, TMWRF, Techren 2, Hoover, Stillwater PV, NPC_SPCC, and Techren 1 PPAs have pricing in excess of the Mead trading prices"

• "Of the generation assets owned by NV Energy, its two coal resources - Navajo Generating Station (255 MW) and North Valmy Generating Station (261 MW) - are slated for retirement before or near the effective date of Energy Choice. These retirements will further add to the resource adequacy issues in the short term. Other units which were constructed prior to 1980 may be difficult to market such as Tracy Unit 3 (1974, 108 MW), Fort Churchill Units 1 and 2 (assuming must run conditions eliminated)(1968, 226 MW), and Clark Unit 4 (1973, 54 MW)."

• "NV Energy has identified four must-run generation units which if sold without addressing the must run condition, could result in anti-competitive behavior by the owners of such units. These units are: 1. Fort Churchill Generating Station; 2. North Valmy Generating Station; 3. Clark Generating Station, and; 4. Clark Mountain Generating Station"

• "Anti-competitive pricing by owners of must run generation units can be eliminated by pricing controls enacted by the organized wholesale market, or by elimination of the must run conditions through transmission system modification, load shedding or peak clipping that allow competition to occur"

The Technical Working Group on Innovation, Technology and Renewable Energy presented a report with the following recommendations:

A. The working group recommends that the Governor’s Committee on Energy Choice encourage the Governor, Legislature, and regulatory agencies and organizations to implement the E.C.I. [energy choice initiative], should it be approved by the voters again in 2018, in a manner that conditions market participation on retail offerings that align with Nevada’s existing goals for renewable energy, energy efficiency and technology, and that do not harm Nevada’s current programs, statutes, and regulations including, but not limited to, renewable energy requirements, energy efficiency, subsidized services for low-income customers, net metering as set out in AB 405 (2017), and storage.

B. The working group recommends that the Governor’s Committee on Energy Choice encourage the Governor and the Legislature to adopt, should the E.C.I. ballot question pass, competitive retail market policies that do not impede progress and innovation in current and future technologies, and to develop and promote innovative policies and programs that advance the use of renewable energy and clean technology.

C. The working group recommends that the Governor’s Committee on Energy Choice encourage the Governor and the Legislature to consider, should the E.C.I. pass, the creation or funding of incubators or pilot projects for innovative technologies that may provide meaningful choice for Nevadans.

D. The working group recommends that the Governor’s Committee on Energy Choice encourage the Governor and the Legislature to consider policies, should the E.C.I. be approved, that promote regulatory flexibility for incentives to renewable energy programs that offer pilot programs to integrate "smart" energy technologies that support distributed generation, storage, and other clean energy advances, including policies that could promote transportation innovation such as green fleets and the use of electric vehicles for storage and distributed generation, and to revisit the topic of community solar gardens during the 2019 Legislative Session

E. The working group recommends that the Governor’s Committee on Energy Choice encourage the Governor and the Legislature to evaluate, should the E.C.I. ballot question pass, all proposed policies and programs with a consideration of positioning Nevada as a net exporter of energy.

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