Say ‘renewable’ and it shall be so

Our legislators, in all their perspicacity and foresight, have said, "Let there be renewable energy," and gosh darn it, there will be renewable energy whether we need it or not and no matter the cost to the citizens of Nevada.

It's good for us, and we're going to swallow a full dose of it and turn "green."

Late last month the Public Utilities Commission of Nevada issued a draft order that concluded "renewable energy has had a minimal impact on residential rates and has not been the cause of high rates in Nevada." Of course, as NV Energy pointed out in testimony, the data the PUC was using was historic -- for only the past five years, as renewables or green energy such as solar, wind and geothermal were just coming onto the power grid. Various calculations placed the cost per month of renewables in 2009 for Southern Nevada ratepayers at somewhere between $1.86 and $2.30, which is up from 29 or 30 cents in 2005. You can see the trend.

Despite this, the PUC concluded renewables provide "environmental and economic development benefits despite (the) difficulty in quantifying them," which it made no attempt to do.

Rather hard to do a cost-benefit analysis when you don't know either the cost or the benefit.

As NV Energy noted, the PUC study fails to looks at future costs, because the study did not account for recently approved renewable energy contracts nor the doubling in size -- from about $70 million to $140 million -- of the Solar Generations program budget, which reimburses those who install solar panels.

Additionally, the legislatively dictated mandate for NV Energy's portfolio is ticking up from 12 percent to 15 percent renewables this year, while creeping up to 25 percent by 2025.

Comments filed in October by the Bureau of Consumer Protection -- a division of the state attorney general's office assigned to protect the interests of residential and small business electric power users -- noted that once the new 500-megawatt gas-fired Harry Allen power plant comes online this month, at a cost to ratepayers of $750 million, coupled with the economic downturn, Southern Nevada has sufficient power for the next decade.

The bureau comments also questioned the need for NV Energy's $500 million, 235-mile One Nevada Transmission Line, saying "the only real reason for building this transmission line, as recognized by Nevada Power (the southern part of the power company) in testimony, is to develop renewable power in rural Nevada and to meet the RPS." That's the Renewable Portfolio Standard created by lawmakers in Carson City.

Adding these factors and the cost of a power conservation program, the bureau concluded "there are only so many incremental burdens that can be added without figuratively and literally breaking the backs of residential ratepayers and businesses as well."

One expense often overlooked by backers of green energy in calculating the cost of intermittent renewables such as wind turbines and solar panels is that every kilowatt-hour of generating capacity must be backed up by the capital and operating cost of maintaining a fossil fuel-fired generator for when the wind dies down or a cloud passes overhead.

In a recent interview, the co-authors of the bureau comments -- Senior Deputy Attorney General Paul Stuhff and Senior Engineer Dale Stransky -- explained their findings.

Stransky confirmed the bureau's comments, like NV Energy's, were cautionary about looking at historical data instead of future costs. "It's mostly geothermal in historical, and the older geothermal is pretty cost-competitive," he said, noting that future geothermal power will be more expensive because current wells were discovered during oil and gas exploration and this "low hanging fruit" has been used up. Wind and solar projects scheduled for the future are far more expensive than gas- and coal-fired generation.

Stransky also noted the PUC approval of the new power plant and transmission line pre-dated the economic collapse, back at a time when the power company was projecting 300 megawatts of load growth every year.

"That all came to a halt," he said.

Stuhff noted that NV Energy President and CEO Michael Yackira testified the company's load forecast is essentially flat for the next 10 years. "So there's little need for additional power. The only need for additional power would be because of the statutory Renewable Portfolio Standard, which is going to increase from 12 to 15 percent. So that's a little 3 percent increase. It'll keep going," he said, until 25 percent in 2025.

Stransky explained, "We were trying to show the lay of the land, to draw the distinction between capacity and energy. We have enough capacity to turn on these power plants to meet load, right. But the RPS is an energy requirement, not a capacity requirement. It's based on how much energy sales, a percentage (of which) has to be renewable. Even though you have the capacity of your power plants, we're not going to run them as often ... because we're absorbing more renewables and that cost of displacing the fuel with renewables is usually higher than displacing that fuel."

Back before natural gas prices started to come down due to new production technology, Stransky said he calculated the lifetime per megawatt-hour cost of the Harry Allen plant at $90, but that has probably come down to $80 or less. On the other hand, solar power costs about $140 per mwh but is coming down, he said, while geothermal costs about $90 per mwh.

At today's natural gas prices, and excluding the capital cost of the plant, Stransky said Harry Allen could produce electricity for $37 per mwh.

Philosopher Adam Smith talked about the invisible hand. But what we have here is the heavy hand of the nannies in the Legislature telling ratepayers to finance their snipe hunt for climate change while the Chinese build a new coal-fired power plant every week. We ratepayers are financing their fantasies.

Thomas Mitchell is senior opinion editor of the Review-Journal. He may be contacted at (702) 383-0261 or via email at tmitchell@reviewjournal.com.