Nevada this year is in an election battle of the billionaires. Two ballot measures could radically remake the state’s electricity market, and investor Warren Buffett, environmentalist Tom Steyer and casino magnate Sheldon Adelson all have money in the fight. But the biggest potential losers are Nevada residents, whose electricity bills could skyrocket depending on how these two votes go.
For decades, the Berkshire Hathaway -owned NV Energy has enjoyed a regulated monopoly, providing electricity in all but the most rural parts of Nevada. Question 3 would amend the state constitution to prohibit Nevada from granting such monopolies or exclusive franchises to an electricity provider. Lawmakers would have until 2023 to create “an open, competitive retail electric energy market.”
Consumers would benefit from more choice. In the 14 states where electricity providers now compete, inflation-adjusted prices have declined by an average of nearly 18% between 2008 and 2016, according to the Retail Energy Supply Association. Prices rose by more than 2.5% over that same period in states where one electricity provider enjoyed a full or partial monopoly.
To amend the Nevada constitution, a ballot measure must gain support in two consecutive elections, and some 72% of voters supported increased energy choices in 2016. This year is the second time around and the effort has drawn nearly $100 million in special-interest contributions, making it the most expensive political campaign in Nevada history.
Casinos, data centers and other big energy consumers resent Nevada’s current regulatory regime, under which they must submit to NV Energy’s monopoly or pay tens of millions of dollars in exit fees for using an alternative provider. Mr. Adelson’s Las Vegas Sands Corp.has contributed nearly $22 million to the campaign for Question 3, while the tech giant Switch chipped in nearly $11 million. But NV Energy likes being the sole energy provider for 90% of Nevada, and this year it has spent more than $63 million to oppose Question 3.
Unlike big corporations, average Nevadans have no recourse to pay their way out of NV Energy’s chokehold on the electricity market. To scare consumers out of giving themselves a choice, NV Energy has warned of possible price volatility. It has noted that the cost of electricity is actually higher in the 14 states where residents can choose their own provider. But those include Massachusetts, Connecticut, Rhode Island, and New York and other states where aggressive renewable mandates have distorted the market in favor of more expensive energy sources like solar and wind.
Which brings us to Nevada’s second energy ballot measure. Question 6 would amend the state constitution to require 50% of all electricity to come from renewable sources by 2030. Nevada’s current mandate calls for 25% by 2025, so this is a dramatic increase. Tom Steyer’s NextGen Climate Action has devoted nearly $6 million for Question 6, and the green lobby is thrilled about the possibility of a captive consumer base.
Question 6 would dilute any savings Nevadans stand to gain from more electricity competition. Even the Natural Resources Defense Council, which favors aggressive renewable fuel standards, estimated in 2017 that household utility bills could rise by as much as 5% by 2030 if half of the state’s energy came from renewable sources. That’s chump change for those in Mr. Steyer’s income bracket, but Nevadans at 50% to 100% of the poverty level already spend 11% of their income on home energy bills.
The special-interest spending on Questions 3 and 6 illustrates how the government intervention in the electricity market creates real winners and losers. To protect their own interests, Nevadans would be wise to vote for more choice and against mandates in how their electricity is generated and who provides it.