News that billionaire investor Warren Buffett has struck a $10 billion deal to purchase NV Energy took many by surprise — but it shouldn’t have.
Nevada’s government-granted monopoly electricity provider has a captive market: If you want to turn on your lights or run your AC nearly anywhere in Nevada, you have to pay NV Energy.
And it turns out, those checks will be big: NV Energy’s residential electricity rates are higher than every other western state, except for California.
Although NV Energy is a for-profit, publicly traded company, it’s also a government-sanctioned, regulated utility, ostensibly overseen by the Public Utilities Commission. But the company employs a cadre of skilled lobbyists to influence legislators to write the rules under which the PUC oversees the utility.
That’s happening right now, with Senate Bill 123. Originally a nakedly pro-utility bill when introduced, it’s been amended but remains very friendly to NV Energy. Under the bill, the company would abandon its aging coal-fired power plants and switch to natural gas and renewable energy such as solar or geothermal.
Ratepayers — that’s you and me, as well as business and industrial customers — will pay to retire the coal plants early. We’ll also pay for the construction of the new power plants. (Once the PUC determines there’s a need for the new power, it must deem new plant construction allowable under the law.)
And, of course, we’ll pay to run them.
Common sense might suggest that if you don’t like paying the power company, you can simply use less energy. Conservation (by letting your house heat up in the summer, running your appliances at off-peak times or replacing your light bulbs with fluorescents) might help the environment, but it won’t help your budget that much. That’s because NV Energy has a guaranteed rate of return: We pay if we conserve, we pay more if we don’t conserve, but either way, we pay.
It seems that everybody favors SB123. At an Assembly hearing this week, a string of witnesses included organized labor, environmentalists, the gambling industry, solar energy producers, the Las Vegas Metro Chamber of Commerce and the governor’s energy czar. (Some of those were not surprises: Solar energy providers could gain a new customer under the bill, and labor would build the new plants. Oh, and the governor’s key advisers also lobby for NV Energy.)
Only the PUC raised any objections to SB123, and that brought angry denunciations from lobbyists and state Sen. Kelvin Atkinson, D-North Las Vegas, for a breach of protocol.
The point: Of course Buffett saw NV Energy as a good investment! The company has a built-in market, outsized influence of the rulemaking process under which it’s regulated and political influence in the state’s highest office. It essentially has the ability to milk ratepayers like a factory farm milks cows.
The fact that Buffett purchased NV Energy is not surprising; the surprise is that it took so long.
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Speaking of large, influential Nevada businesses throwing their considerable weight around the Legislative Building
If in the near future you can’t place a sports bet at a kiosk in your favorite locals pub, blame the Nevada Resort Association. That’s the organization behind Senate Bill 416, which on Thursday passed the Assembly 41-0 and is now on its way to Gov. Brian Sandoval for an expected signature.
The bill seeks to regulate so-called restricted gaming licenses, which limit bars and taverns to no more than 15 slot-type machines. Although the law says “no other game” is allowed in those establishments, a regulation approved by the Gaming Control Board currently allows sports betting kiosks.
But not for long: Not only would SB416 ban sports kiosks from restricted license establishments, it would also attack Dotty’s around the state by adding new requirements for them to operate: They’d have to have at least 2,500 square feet of space, a permanent bar, and a restaurant with 25 seats and a kitchen on-site that’s open at least 12 hours a day. Bars that aren’t in compliance would have two years to become compliant, although those in operation before 1990 would be grandfathered in.
NRA lobbyists say restricted license holders are not supposed to compete with unrestricted license holders, such as their members, which by law have to invest millions of dollars in their properties with rooms, restaurants and recreational activities. (Those requirements are actually favored by casinos, as they make it more difficult for competitors to enter the market.)
But nobody’s going to confuse betting $10 on a baseball game while enjoying a tall frosty beer with being inside a real, live sports book. People who prefer the latter will still do it. People who prefer the former will skip betting rather than endure the hassle of being forced to — once again — do business with a member of the NRA that just happens to have the ear of policymakers.
Largely lost in the debate are the regular folk who struggle to pay those big summer power bills and who just want to enjoy Nevada’s legal gambling system at a corner bar. But if the rabble had money, they’d have lobbyists and wouldn’t be at the mercy of those who do, wouldn’t they?
Steve Sebelius is a Review-Journal political columnist and author of the blog SlashPolitics.com. Follow him on Twitter (@SteveSebelius) or reach him at (702) 387-5276 or email@example.com.