Fresh Ideas: Why I’m against the Energy Choice Initiative

“We are gathered here today to take a stand against an industry that has abused and overcharged Massachusetts customers for way too long — competitive electric suppliers.”

That’s Massachusetts Attorney General Maura Healey in a press conference last March. She’s demanding a shutdown of Massachusetts’ competitive electrical supply market because of deceptive sales tactics used by competitive energy providers, and sharply higher electrical bills for Massachusetts residents who have switched to competitive providers.

Wait, what? Nevada will be voting for the second time this November on a constitutional amendment to allow just the kind of market she’s talking about — the so-called “Energy Choice Initiative” — labeled Question 3 in the 2016 election.

Something is wrong here.

Healy describes a competitive market in which residential customers — especially low income and elderly — have been targeted with deceptive and aggressive sales tactics and when they switched from the basic service to competitive providers, ended up paying higher bills.

Healy said, “Competitive supply has been a really bad deal for individual residential ratepayers. Between July 2015 and June 2017, we found that Massachusetts customers who switched to competitive electric supply paid $176 million more than they would have paid had they just stayed with basic service.”

You might say we can design a better program in Nevada. But how can we properly design and regulate a program so complicated and rife with opportunity for abuse with a small PUC and consumer advocate staff and a legislature that only meets for four months every other year?

Then there’s the danger of putting a right to choose competitive energy into our state constitution, as this initiative would do. What happens if abuses like those in Massachusetts arise? We would need a constitutional amendment to fix or ditch the program.

Nevadans are waking up to what a bad deal energy choice will be for the state. Groups including many of our rural electric co-ops, firefighters, public safety officers, the AARP, and the Asian and Latin Chambers of Commerce all oppose the initiative.

So why did the initiative pass so overwhelmingly in 2016? The key to understanding this is that earlier in that year NV Energy had proposed — and the PUC approved — a significant change to net metering contracts with small customers.

NV Energy proposed to both raise the base rate and gradually cut the amount it paid for the electricity generated from rooftop solar by its customer-providers. Customers and clean energy advocates were outraged and flooded PUC meetings to testify against the NV Energy proposal, but it was approved anyway.

Soon after this, the Energy Choice Initiative was introduced, and I suspect some voted for the measure as a vote against NV Energy and in favor of renewable energy. Meanwhile, the Nevada Legislature passed — and Gov. Sandoval signed — a bill taking net metering rates paid by NV Energy to customer-providers up a more reasonable level, and the governor replaced every member of the PUC who had voted for the unfair rates.

A vote for the Energy Choice Initiative isn’t a vote for clean energy. There’s nothing in the Initiative that would require more renewable energy — just a short sentence that nothing in the initiative “shall be construed to invalidate Nevada’s public policies on renewable energy, energy efficiency and environmental protection.”

In states that have energy choice, several problems have arisen implementing state policies on renewable energy, entailing legislative fixes. Rooftop solar net metering is particularly difficult in energy choice market. Who administers the program, and what incentive do multiple providers have to make sure net metering works for the customer? Renewable portfolio standards (where a percentage of a state’s electricity is required to come from renewable sources) are also a problem. In some energy choice states, competitive providers can’t meet the standards, so they pay fines instead — clearly not the purpose of a renewable portfolio standard.

There are other issues with energy choice including questions of reliability and adequate communication with customers, potential lack of affordable competitive providers for small customers, and the outright abuse that took place in Massachusetts.

I’ll give the last word to my friend Joyce Newman: “As one who spent years in the electric industry, I know how complicated it is to decipher. And even with my experience, I don’t feel qualified to compare offers from various providers and make the right decision. It’s likely that rates for homeowners and small businesses will go up — so why dismantle a system that works so well just because a few large customers want to do it? This has scam written all over it in big red letters.”

Anne Macquarie blogs about clean energy and climate change in Nevada at nevadanscleanenergy.org.