Despite having one of the hottest cities in the U.S., a recent report shows Nevada’s electricity prices have had the most dramatic drop over the last 10 years.
An S&P Global report released last month said Nevada’s electricity prices fell 14.5 percent between 2009 and 2018, the most among any state. The report attributed this decline to the state’s use of natural gas.
“It is one of the states that uses natural gas the most in the production of electricity,” the report’s author and S&P Global Market Intelligence principal research analyst Dennis Sperduto said. “(Natural gas prices) have dropped a lot. They’re quite low now, and they’ve been low.”
Leading the pack
In 2009, the retail electricity price in Nevada was 11.18 cents per kilowatt hour. In 2018, it had dropped to 9.56 cents per kilowatt hour.
In that same timeframe, the average electricity prices nationwide rose 9.7 percent to 10.81 cents per kilowatt hour.
The report said Nevada’s use of natural gas — which has had prices drop dramatically over the last 10 years — allowed the price reduction. About 70 percent of the state’s power was generated from natural gas in 2017. Only one other state, Delaware, generates a higher percentage of power from natural gas, at 89 percent.
NV Energy spokeswoman Jennifer Schuricht said Nevada’s reduced costs are a result of careful planning, increased customer options and more clean energy.
“The investments we’ve made in highly efficient natural gas generating stations, our more recent additions of low-cost renewable resources, and the work of NV Energy employees to watch our costs are benefitting all customers through decreasing rates,” Schuricht said via email. “Our customers statewide will experience another rate decrease on Oct. 1, and we will continue to seek opportunities to find more savings for customers.”
Additionally, because Nevada had a run-up in rates prior to the recession, it was no surprise to see the prices drop, according to Wade Schauer, research director of Wood Mackenzie’s Americas power and renewables research division.
But the price drop may not have a significant impact on residential ratepayers. Schauer said residential customer rates have been relatively flat over the years because they require more transmission and distribution investment than their counterparts.
“Commercial (and) industrial customers have seen more savings due to lower supply costs, driven by the lower natural gas prices,” Schauer said. “Meanwhile, the growth in residential customers has required a growth in (transmission and distribution) investment.”
Schauer expects natural gas prices to remain relatively low throughout the next 10 years, but that doesn’t mean Nevada will retain its ranking. He said transmission and distribution costs have more of an impact on price than generation supply costs, and those costs are expected to rise as more solar is added to the grid.
Nevada is currently looking to install the largest solar facility in the country.
“I doubt that Nevada will continue to see rate reductions,” Schauer said.