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Nevada’s Energy Choice Initiative Could Set Precedent by Including Rural Electric Cooperatives
DENVER (Nov. 2, 2018) —On Nov. 6, Nevada voters will choose whether the state will deregulate its electricity markets. Nevada’s Energy Choice Initiative is distinctive because it is being done through an amendment to the state constitution, and it does not exclude rural electric cooperatives from retail competition. According to a new report from CoBank’s Knowledge Exchange Division, the Energy Choice Initiative, if enacted, will have a negative impact on Nevada’s rural electric cooperatives and their member-owners.
The report details three main issues that rural electric co-ops will have to contend with: stranded costs from divestiture of NV Energy’s generation assets, fewer customers based on the opt-in model in the language of the initiative, and the potential loss of federal hydroelectric power contracts.
“Passage of the Energy Choice Initiative will force NV Energy to divest its generation assets. This is expected to result in stranded costs, which will be passed onto Nevada ratepayers. As a result, rural electric cooperative member-owners will likely see higher electricity bills,” said Taylor Gunn, lead industry analyst with CoBank’s Knowledge Exchange Division. “Electric co-ops could face shrinking customer bases since existing customers will have to opt in for service from their incumbent provider, otherwise they are automatically enrolled with a retail provider. Federal hydro generation is a very important resource for Nevada electric co-ops, but passage of the Energy Choice Initiative could force electric
co-ops to exit these contracts.”
According to Gunn, proponents of retail choice, mainly large commercial and industrial customers, are expected to advocate for various versions of deregulation in Wisconsin, Minnesota, Florida and Wyoming. Large commercial and industrial power users support retail choice as a way to have more options for meeting their energy needs. This is driven by the divergence in wholesale and retail electricity rates in many parts of the country.
“Nevada’s Energy Choice Initiative is the exception since it does not exclude rural electric cooperatives from competition,” said Gunn. “But support for retail choice in other states has the potential to expose a growing number of electric co-ops to competition.”