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Jon Wellinghoff has made a career of looking out for average energy users, serving as Nevada's first state consumer advocate and writing the bill that created the Nevada consumer advocate's office. Photo by Craig L. Moran. Jon Wellinghoff arguably has become Nevada's leading advocate for renewable energy from geothermal or hot underground water, solar wind and biomass, such as wood chips from unwanted brush. Photo by Craig L. Moran. VITAL STATISTICS Name: Jon Wellinghoff. Position: Managing Attorney, Energy and Environmental Law Practice at the firm of Beckley Singleton. Age: 51. Family: Wife, Karen Galatz; daughters Andrea and Sarah; sons, Jules, Jacob. Education: Graduate of the Antioch School of Law in Washington, D.C., master's degree in math from Howard University in Washington, and bachelor's degree in math from the University of Nevada, Reno. Work history: Legal assistant to a member of the Nevada Public Service Commission; Deputy District Attorney in Washoe County (Reno) for the consumer protection division; counsel to the Senate Commerce Consumer Subcommittee; staff attorney for the Federal Trade Commission; first Nevada consumer advocate from 1981 to 1988; lead technical attorney in Pepcon lawsuits for insurers seeking to recover damages to homes and businesses from the explosion; associate professor of environmental law at the University of Nevada, Las Vegas; and recently staff counsel to the Nevada Public Utilities Commission. Hobbies: Skiing and karate. Favorite Books: "Ecological Democracy" by Roy Morrison and "Steady-State Economics" by Herman Daly. Hometown: Reno. In Las Vegas since: 1989.

Sunday, May 06, 2001
Copyright © Las Vegas Review-Journal

NEVADAN AT WORK: JON WELLINGHOFF -- Managing Attorney at the firm of Beckley Singleton

Renewable power advocate focuses on helping Nevada follow the sun

Two decades of experience help Jon Wellinghoff understand the technical nuances of utility regulation as well as the politics of electric utility legislation.

He arguably has become Nevada's leading advocate for renewable energy from geothermal or hot underground water, solar wind and biomass, such as wood chips from unwanted brush.

He was Nevada's first state consumer advocate and wrote the bill that created the Nevada office of consumer advocate.

With the help of Randolph Townsend, now a Republican state senator from Reno, and then-Attorney General Richard Bryan, the consumer advocate's office was made a constitutionally required position in Nevada.

Wellinghoff; former Consumer Advocate Fred Schmidt, who represents the Southern Nevada Water Authority; and current Consumer Advocate Tim Hay were influential in arguing for legislation designed to address the electrical power crisis in the West.

Wellinghoff focused on legislation designed to boost the state's use of renewable energy. He drafted legislation that requires Nevada Power Co. and Sierra Pacific Power Co. to buy increasing portions of their electrical supply from so-called renewable resources.

The bills, which are slightly different in the Senate and Assembly, passed those two houses by sizable margins. Senate Bill 372 passed the Senate 18-3, and Assembly Bill 418 carried in the Assembly by 26-14, with two abstaining.

If Gov. Kenny Guinn signs the bill into law, Wellinghoff can take much of the credit.

Early in his career, he became acquainted with some of the state's most powerful politicians and was known for his outspoken views on consumer issues and renewable electric energy.

He was born in Santa Monica, Calif., but, at age 4, moved with his family to Reno.

After earning advanced degrees in Washington, D.C., he returned to Northern Nevada in 1975 and became legal assistant to a member of the Public Service Commission, the predecessor to the Public Utilities Commission.

Then, he became the deputy district attorney in Washoe County for consumer protection. There, he represented Washoe County in utility rate cases and in cases relating to power plant projects.

Question: Was your work limited to utility regulatory issues?

Answer: We got involved in consumer fraud cases, such as a bait-and-switch case involving locker beef.

Mills Lane was the district attorney in Washoe County. He is also a famous boxing referee and then he got his own TV show (as a judge).

Mills and I used to go back and forth, because Mills' version of consumer protection was, "If the consumer was so stupid that they did it in the first place, then they should be in jail."

Question: What did you do after that?

Answer: I became a staff attorney on the consumer subcommittee of the U.S. Senate Commerce Committee and, shortly afterward, a staff attorney with the Federal Trade Commission. I investigated fraudulent schemes involving income tax credits for residential solar systems around the nation.

Then, I came back to Nevada and started working with Randolph Townsend, now a state senator, to establish a consumer advocate's office in Nevada, and then-Attorney General Richard Bryan.

Townsend obtained enough signatures to put the consumer advocate proposal on the ballot as an initiative. The Legislature then passed a similar but improved version. As a volunteer, I actually wrote the 1981 bill that created the Office of Consumer Advocate.

It was No. 11 on the ballot, which also happened to be a California measure that prohibited grocers from selling soft drinks unless they came in returnable bottles.

There were California grocery chains that had stores in Nevada. Raley's was one. Behind you, you have an example of the grocery bags that Raley's was using in stores all over Nevada (with mesages urging customers to vote no on Initiative No. 11.)

My father literally went to Raley's stores all over Northern Nevada and asked them to pull bags from the stores. Eventually, the Nevada issue passed by a large margin. Before the measure passed, I was appointed consumer advocate under the state law in 1981 before the election ratified the law.

Question: The name of the office has changed since then.

Answer: The duties of the office were later expanded and it became the Bureau of Consumer Protection. That was something we tried to do every session, but, when I was consumer advocate, they tried to get rid of me every session.

All of the utilities were able to lobby against the office on a continual basis. We had to go in and justify our budgets, justify our actions. We had to show every single dollar that we saved (consumers).

We showed the Legislature that over the (eight-year) term of my office we saved Nevada consumers more than $40 million.

Early on, we started looking at root causes of rate increases. Our conclusion was that the root cause was really (lack of long-term) resource planning. So I crafted the Utility Resource Planning Act of 1983. It is still the law today. That act went on to become a model (law) used in 17 other states.

As part of resource planning, we were involved in ensuring that renewable resources such as geothermal energy (from hot underground water) was put into the mix. I worked with then Commissioners (Fred) Schmidt and (Steve) Wiel to ensure that Sierra Pacific Power entered into contracts with geothermal developers in Nevada.

Question: You still favor using renewable power resources.

Answer: We have tremendous geothermal, wind, solar and biomass resources in the state. They are valuable for hedging prices for escalating fossil fuel prices.

Washington and Oregon have benefited, because 50 years ago the federal government set down a policy to hedge against fossil fuel costs in generating electricity. The government used indigenous hydro resources to produce electricity. We have to do the same thing in Nevada today (with other renewable resources).

Question: What did you do after serving as consumer advocate?

Answer: In 1989, I moved to Southern Nevada. I was developing an energy law practice, but, at the same time, I worked as a technical attorney on the Pepcon case for my brother-in-law for four years.

(The Pacific Engineering & Production Co., or Pepcon, plant in Henderson exploded in May 1989, killing two workers.)

Question: What did you do then?

Answer: That's when I looked into the issue of developing an urban co-op (for electricity) in Southern Nevada. A co-op is controlled by its members. Valley Electric is an example in Pahrump.

Question: Why did you want to do that?

Answer: I wanted to create incentives or prompt a utility to be much more active in two things: One, energy efficiency, and, two, using indigenous and renewable energy resources.

I saw that with the utility being an investor-owned entity that it has one primary mission in life, that is a legal responsibility, and that is to maximize profits to its shareholders. As such, it is in a natural and competitive conflict with its customers, because its customers want low rates but they also want low bills because we use a lot and have a lot of air conditioning in the summer.

Question:You have mentioned other advantages of cooperatives.

Answer: You have two big costs that co-ops don't incur. One is dividends to shareholders. You didn't have to pay those anymore, and the other is federal income taxes. You didn't have to pay those, either.

Question: What did you do?

Answer: In 1995 and 1996, I started investigating the possibility of forming a co-op in Southern Nevada, and, in essence, buying Nevada Power's (electric) distribution system and turning it into a cooperative utility. In fact, you could run the utility at least 10 percent cheaper than Nevada Power could run it from day one.

Question: How did you intend to raise the money?

Answer: My primary source of financing was a private, nonprofit financing group in Virginia called the Cooperative Financing Corp. They're a multi-billion-dollar corporation, and they provide financing to most of the rural cooperatives in the country.

Answer: I also went to the large users in Southern Nevada, the hotel casinos, and ultimately the casino's chief financial officers agreed that my model was financially viable.

I had a written commitment from Cooperative Financing Corp. for $800 million. I was in the process of setting up discussions with the management of Nevada Power.

Question: What went wrong?

Answer: I needed a partner to come in and buy the (power plants) which would have been another $800 million to a billion dollars. So we entered into discussions with large independent power producers. I won't name any names, but these are multi-billion-dollar companies.

One almost committed to be the partner. In fact, we had a very high-level meeting in Seattle with that company. Senior executives at this independent power producer and their Wall Street analysts met with us. Ultimately, they backed away.

Question: Later, you joined the Public Utilities Commission as staff counsel. You were lead counsel on the merger application of Nevada Power and Sierra Pacific Power, but you drew heat from cogeneration plant owners who used power plants for dual purposes, such as growing tomatoes and generating power. They had long-term contracts to sell electricity to Nevada Power.

Answer: We had a deregulation law that went into effect in 1997. That created a new entity, a pure electric distribution company. As such, the long-term contracts with cogenerators could be abrogated if it was in the public interest. I was advocating that at the time.

I will admit this in retrospect and with hindsight that the abrogation of those contracts would not have been in the interest of the public, because right now those contracts are, in fact, providing long-term, reliable power to Nevada citizens at a much lower cost than on the spot market.

Ultimately, the dispute over those contracts and the maintenance of those contracts was the reason I left the Public Utilities Commission.

Question: What have you been doing since then?

Answer: I have been focusing on the development of renewables and, more importantly, making renewables a substantial portion of the (energy) portfolios of utilities in Nevada, Arizona, California, Oregon and Washington.

Question: Why should they do that?

Answer: I think this is necessary for the well-being of the energy future of our country. Hydro-power from dams in the West has kept prices as low as they have been over the last 40 or 50 years. If we hadn't had that hydro hedge, our electrical prices could be double what they are now. You would have had to put fossil fuel plants in to replace all that hydro and that would have driven the prices of fossil fuel even higher than they are right now.

So we have a similar situation. We can't build any more hydro (power plants). We know the environmental damage that would do, and we know the problems associated with that. We have to look at a new non-fossil fuel hedge in the western United States, and that new hedge is geothermal, wind, solar and biomass.

Question: For a long time, most renewable resources cost more than conventional power. Is that still true?

Answer: Prices at least in wind and geothermal are comparable to natural gas.

Question: Why haven't utilities been willing to use wind power and geothermal power?

Answer: Primarily, it comes back to the prime directive -- maximize profits for shareholders -- and that includes minimizing risk.

They also are going to choose things that are short term. So if they choose short term and less risky, they're not going to choose renewables. A renewable (energy) developer can't develop with a short-term contract. They are obtaining debt from independent financing parties, who require long-term contracts to do financing.

So we're not seeing renewables being developed, but they should be, just like we needed to have the federal government step in and start building dams (for hydroelectric power) 60 years ago.

Question: What's the solution?

Answer: We need to have state government step in and say, 'Utilities, this percentage of your total load should be renewables as a hedge (against increases in gas costs).' It's part of independence for the state of Nevada. It provides us a degree of independence from fossil fuels (oil, gas and coal).