Utility movers and shakers in Nevada continue to be optimistic as they strategically manage new technologies, increased regulation, customer growth and a changing portfolio mix of options.
Regulations
A regulatory agency that ensures investor-owned utilities comply with laws enacted by the Nevada Legislature, the Public Utilities Commission of Nevada (PUCN) oversees a broad spectrum of entities. “Each utility has its own challenges. In natural gas we have aging infrastructure and we need to repair and replace pipelines. We have to watch costs and maintain safe service,” says Anne-Marie Cuneo, director of regulatory operations staff. “With respect to small water companies, we also have aging infrastructure and natural-occurring arsenic.”
While energy companies continue to add more alternative energy to their portfolios, individual consumers have also shown increased interest in renewables. “Small rooftop solar has made a big splash,” she says. “The panel price of solar has gotten really cheap. As the costs have come down, it’s much more accessible to people.” Other forms of alternative energies, however, have not worked out as well for Nevadans, according to Cuneo. “Nevada doesn’t have a very good wind resource,” she says. “The state is blessed with geothermal, but there’s a lot of development risks. A lot of it is on public land.”
A big concern of utilities in many states is Section 111 (d) of the Clean Air Act which, according to the PUCN, awards overreaching powers to the United States Environmental Protection Agency (USEPA). The PUCN has submitted lengthy written objections to the regulations that address rules at the federal level for reducing greenhouse gas emissions at existing fossil fuel-fired electric generating units. In addition to the legal and jurisdictional issues, the PUCN objects to the timing of submittals, the yearly reporting requirement, lack of symmetry between goal calculation and compliance calculation, high program costs and the fact that carbon capture and storage is not a feasible technology for Nevada, to name a few. Reducing carbon emissions means shutting down a fossil fuel power plant and replacing it with something else, such as a renewable. “Reducing carbon emissions comes at a price. You’re replacing it with something more expensive,” Cuneo says.
In compliance with the Nevada Legislature’s SB 123, NV Energy has retired about 500 MW of coal-fired power and is in the process of replacing this with cleaner energy. “We acquired two natural gas-fired plants,” Paul Caudill, president and CEO of NV Energy said. The Las Vegas Cogeneration units and the Sun-Peak Generating Facility will bring about 496 MW of gas-fired power to the company portfolio. “We’ll be looking for 300 MW of renewables in the next year,” he says.
Power
The PUCN was also an active participant in the approval process for NV Energy’s acceptance into the Energy Imbalance Market (EIM) that will cover seven states and more than 44 million people when it goes live this fall. A combination of California Independent System Operator (California ISO), Oregon-based PacifiCorp and NV Energy, the EIM will strengthen grid reliability by balancing supply and demand closer to when electricity is consumed. By identifying fluctuations in supply and demand, the EIM will automatically find the best resource to meet the current needs across its service region. “California has a lot of renewables during the daytime and they can’t always use it. The sun shines at different times there than in Nevada. We can trade power on the short-term,” Cuneo says.
The new kid on the block a year ago, Caudill said his most important priorities would be safety and customer satisfaction. Now, into his second year on the job, he points at the progress that has been made. “We had the best year the company has had with personal safety. We cut the rate of injury almost in half,” he says.
Customer satisfaction is also getting higher marks, according to company surveys and one-on-one encounters. NV Energy began around the clock service in its VOIP call centers about a year ago and found that more than 80 percent of its callers were connected within 30 seconds or less. The company also improved the efficiency of its system by linking the centers on both ends of the state. The company facilitated increased use of the online “My Account” for customers who want to monitor usage online. Out of its 1.3 million customer accounts, the company expects that around 540,000 will be using it by the end of the year.
Also optimistic, Thomas Husted, CEO of Valley Electric Association (VEA) in Pahrump, radiates bullish enthusiasm while describing the future of the company and the Industry. As a member-owned electric utility, VEA doesn’t generate electrical energy, but buys it on the open market for its more than 17,000 members. Its service territory extends for about 250 miles along the California-Nevada border from Sandy Valley in the south to halfway to Reno in the north. “We have one of the most sophisticated operating systems in the West. We’ve always been ahead of the game,” he says.
Although VEA has had an impressive history of steady growth in recent years, last year was a real winner, according to Husted. “2014 was an extremely good year. We continued to grow out of the recession and 2015 will be another exciting year,” he says. The company enjoyed a 40 percent increase in revenue last year which allowed it to maintain a ten-year run with no rate increases.
As VEA continues to expand its interest in solar energy, Husted talks about the 80-acre solar park the company is developing near Pahrump. “We’re finalizing plans to put in a community solar park which will have 60,000 solar panels. We’ll make them available to our members if they choose to participate,” he says. “They don’t have to put panels on their roof or in their backyard.” For those consumers who do generate their own solar power, Husted says VEA will buy their excess. “We’re developing the rooftop generation,” he says.
Other VEA projects include the installation of fiber because the company’s service area lacks high-speed broad band communication. “We’re running fiber to every home,” Husted says. The optional connection to the service is expected to be available by the end of this year. In addition, VEA is expanding its Pahrump-based campus to include a new community conference center and other enhanced operational facilities.
Husted is especially enthusiastic about the future as he anticipates fulfilling the energy needs for more fully automated homes. “I wish we could change faster and transition to where the world is going,” he says.
Water
As the state continues to respond to drought conditions, it’s not hard to figure out the biggest concerns of Nevada water companies. “We’re in our fourth year of drought. It’s our highest attention right now,” says Mark Foree, general manager of Truckee Meadows Water Authority (TMWA).
When put into historical perspective, however, it may not be all that unusual. “It seems like we have a prolonged drought every 20 years,” he says. The company’s strategic planning has enabled them to continue serving their customers even through the driest years. “We plan for a nine-year dry cycle and we have the water supplies to back that up. This comes from well pumping and upstream storage,” he says.
Although TMWA has experienced healthy growth in recent years, through conservation methods it has actually used less water. Increased awareness of usage along with the installation of water meters has caused a drop in consumption from 86,000 acre feet in 2001 to 74,000 last year. “We’re using a lot less than 15 years ago. It appears that we’ll call for some conservation this summer,” Foree says. He expects that usage for this year could drop to less than 70,000.
Foree speaks highly of the much anticipated merger between TMWA and the Washoe County Department of Water Resources (DWR) which was finalized last year. “We acquired 24,000 more customers with the merger. It’s a good thing for the community. Most of the new systems are ground water,” he says. These provide an efficient balance with TMWA’s resources which are mainly surface water. “We own all the water rights in Independence Lake and one-half in Donner Lake,” he says. The consolidation has been good for the community because it has resulted in better management of all the water resources. “We’ve seen some economies of scale so we’ll have fewer rate increases as we go forward,” he says.
As part of its ongoing water management strategies, TMWA uses its Aquifer Storage and Recovery Program to bank water for future use. “We take water from the Truckee, treat it and then we put it back down into the ground,” Foree says. Up to 10 million gallons a day can be injected into selected wells during the fall and winter.
Southern Nevada is also positioned to withstand drought conditions and, despite the ongoing drought on the Colorado River, John Entsminger, general manager of the Southern Nevada Water Authority (SNWA), says that Southern Nevada will have enough water for decades to come. “We’re very comfortable with our facilities and our resource portfolio right now,” he says. Even as Lake Mead dropped 130 feet over the past 14 years, methodical strategic planning by the company has ensured a reliable water supply for many years to come.
The much anticipated Lake Mead Intake No. 3 project, which will pump water from the lake at 860 feet above sea level, is expected to come into service in July. “Immediately it will help our water supply because we can pull from the deepest part of the lake which is colder and cleaner,” Enstminger says. Coupled with the new intake is a low lake level pumping station, now in development, which will draw water from the 875-foot level. These two entities will secure the water supply regardless of the level of Lake Mead.
SNWA is constantly developing and promoting greater efficiencies in water usage through conservation and recycling. “We’ve reduced net use of water by about 40 percent over the past 14 years,” Entsminger says. Part of the reduction is because the type of growth has changed with less turf and landscape being used and more housing units per acre being built. Also Southern Nevada is somewhat unique by being able to utilize return flow credit methodology, which captures 99 percent of the water used indoors, treats it and then returns it to Lake Mead. “If it hits a drain, we reuse it,” Entsminger says. Looking several decades into the future, the company is exploring an instate ground water project which would pipe water from Lincoln and White Pine counties into the SNWA system. In addition, SNWA is also looking into the possibility of developing a desalination plant in Mexico.
Entsminger says that new technologies have resulted in greater efficiencies for both the company and its customers. “We don’t do check processing anymore. The vast majority pay online. We’re getting ready to launch our first mobile app,” he says. The days of meter readers walking the streets is also a dim memory. “Our entire retail side has automatic meter reading devices. We just drive down the street with a truck,” he says.
The company is very aware of the critical role they play in economic development as businesses who locate in Southern Nevada need to be assured that they will have enough water for their needs. “We appreciate the support that the business community has given us,” Entsminger says. “We have a very stable safe secure water supply in Southern Nevada.”
The Next Generation
Natural gas continues to be one of the darlings of the energy world, according to John Hester, president and CEO of Southwest Gas Corporation. “It’s a pretty carbon-friendly fuel,” he says. As coal falls out of favor, natural gas has become even more attractive, especially with a 150-year supply that is mostly domestically produced. “Domestic natural gas development has been a growth engine for the economy,” he says.
As coal-fired electrical plants are retired across the country, cleaner gas-fired facilities have taken their place. Also the use of natural gas in vehicles continues to grow. “We’re seeing increased usage in fleet operators. People continue to appreciate the low cost and the benefits to the environment compared to diesel fuel,” Hester says. “We’re also looking at liquefied natural gas (LNG) which puts a bigger energy component in a vehicle compared to compressed gas.” The company’s LNG plant in Lovelock, which is designed to provide customers peak service during winter months, can be used by long-haul truckers in warmer months. Hester also emphasizes that natural gas partners well with renewables and with electric cars, such as Tesla. “I think we can co-exist with electric vehicles. It’s going to be a net improvement for both,” he says.
In recognition of the continuing regulation of the energy industry, research and development is adding some rather fascinating options to the fuel mix. Hester says he’s pretty excited about the idea of methanization, a process that uses electricity from a photo voltaic cell to perform electrolysis on water to produce hydrogen. The hydrogen is then combined with carbon from carbon dioxide in the atmosphere to make synthetic natural gas.
Hester predicts a bright future for his company with a natural growth rate of about one and a half percent annually. “The desert southwest continues to be a good place to live. We’re bullish on Nevada,” he says.
As they gamely face the challenges of 2015, Nevada’s utility companies embrace a changing landscape that requires adept leadership and vision to navigate. Those at the helm are invigorated by the opportunities presented and look to the future with eager anticipation.
