NV Energy gets green light to seek rate hikes for Greenlink
(Nevada Current) Nevada’s electric company is one step closer to sticking customers with the bill for a massive $2.5 billion transmission line project, despite assurances from NV Energy’s CEO to lawmakers that any potential rate hike would be imposed only after the project is completed and in service.
“We will put thousands of people to work today and Nevadans will not be asked to pay for this investment until at least five to six years down the road.” NV Energy’s Doug Cannon told legislators in May 2021, before they voted to approve Greenlink Nevada, over objections from state regulators and the casino industry.
In 2020, NV Energy proposed the 600-mile project – a western transmission line from Las Vegas to Yerington, and a northern line from Yerington to Ely. The PUC, warning against “rate shock”, allowed NV Energy to proceed on the western line but only allowed permitting and land acquisition, not construction, of the northern line.
State lawmakers stepped in and approved the entire plan in 2021.
Cannon testified before lawmakers at the time the utility would not seek to recoup its costs until the “asset goes into service.”
But just a year later, NV Energy asked federal regulators to grant permission for the utility to come back and request rate hikes (known as incentives) to offset the costs of construction, and pay for its troubles should Greenlink be canceled.
NV Energy is owned by Berkshire Hathaway, the company controlled by billionaire Warren Buffett.
Cannon’s assertion in 2021 to the Senate Committee on Growth and Infrastructure “disqualifies several of the incentive rates, including something called construction work in progress, where you recover from ratepayers as you’re building the transmission line,” says Tyson Slocum of Public Citizen, a watchdog organization that filed a protest with FERC regarding NV Energy’s petition to recover its costs.
“Berkshire Hathaway functions as capitalism’s ATM: corporations turn to it when desperate and in need of cash,” the watchdog group wrote in its protest.
In an intervention filed with FERC last summer, MGM Resorts International and Caesars Enterprise Services LLC wrote the “Investment in Greenlink Nevada will put upward pressure on NV Energy customer rates, a fact that cannot be ignored as NV Energy attempts to shift Greenlink Nevada project risk from the Companies to customers through its proposed incentives which will add unnecessary significant costs for customers.”
Public Citizen argued the move by Berkshire Hathaway was “contrary to the justifications Berkshire Hathaway pledged when it acquired Nevada Power in 2013. … If the commission is going to approve ginormous utility mergers that claim to produce benefits for consumers, the Commission must hold companies to the promises they made to FERC.”
Last week, FERC dismissed Public Citizen’s protest and granted NV Energy’s requests, saying it’s unclear whether Cannon, when testifying at the Legislature, was referring to rates within federal or state jurisdiction.
Slocum says FERC’s ruling is “sloppy.”
“The state has a minor bit of jurisdiction over aspects of the transmission line,” says Slocum. “The federal government has the vast majority of jurisdiction over the transmission line because most of the transmission line is designed to accommodate interstate service.”
He says Cannon’s assertion that customers wouldn’t see an increase in their bills for years “was to ensure that lawmakers felt comfortable voting for the project. They wanted to make sure that this bill passed. And so he made a campaign promise and FERC just allowed him to violate that promise.”
Slocum says FERC had an obligation to determine what Cannon meant and could have requested a sworn affidavit, rather than assume and rubber stamp the utility’s request.
NV Energy did not respond to requests for comment.
“There is nothing that demonstrates that rates will necessarily go up at all,” then-state Sen. Chris Brooks, who championed the project, told the Current in 2021, after the Legislature gave the transmission lines its stamp of approval. Brooks left the Legislature in November 2021.
Members of the committee that heard Cannon’s promise in 2021, Sen. Dallas Harris, a Democrat, Sen. Pat Spearman, also a Democrat, and Republican Sen. Scott Hammond, did not respond to questions about whether they were misled by the utility.
A wave of electrical grid construction nationally has led to growing support for the idea of an independent monitor to examine the need, costs and planning behind new projects to protect customers and ensure utilities — for whom transmission spending and the return on equity it comes with is a major profit stream — aren’t taking advantage of ratepayers.