Choice. Everyone wants it. So why would it not be a good idea to be able to choose who you buy your electric energy from?
That was the question recently asked of Nevada voters. In 2016, a few large businesses developed a proposition and funded a campaign to create energy choice through a ballot initiative that would have amended the Nevada Constitution. The explanation that accompanied the initiative suggested competition would result in lower rates. The ballot question passed by a large margin in the 2016 general election. Fortunately in Nevada, propositions to amend the constitution must be approved twice by the electorate.
Energy choice, sometimes called retail choice, is not a new concept. It was a popular idea in the late 1990s. Fourteen states actually restructured their electric utility sectors to provide some version of complete or limited choice. States such as Nevada, California, Montana and others started down the path but pulled back when it became apparent that without proper structure and regulatory oversight, the new energy providers could take advantage of consumers.
The reason a few businesses in Nevada pushed the concept again in 2016 was clear: In states that have some form of choice, large businesses that buy significant amounts of power can wield that purchasing power to negotiate lower rates. It also became clear that residential consumers and small businesses in those states usually don’t benefit. In fact, data from the U.S. Energy Administration shows the average rate for residential consumers in states with choice are significantly higher than states with the traditional utility model.
Some states with choice are now considering returning to the traditional utility model. Massachusetts Attorney General Maura Healey recently asked for the end of the retail market in her state because of deceptive sales tactics, saying, “competitive supply has been a really bad deal for individual residential ratepayers.”
Nationally, the number of people buying energy from retail energy providers has declined from the peak in 2014.
Outside of the metropolitan areas, most of Nevada is served by electric cooperatives, municipal utilities and power districts. These public power utilities do not profit from the sale of energy. They were created by and for the people they serve. Decisions regarding energy supply and services offered are made locally by their elected boards.
The proposed constitutional amendment to mandate energy choice for all Nevadans could have prevented public power utilities from selling energy, limited local decision making, and ultimately increased rates for average consumers.
As the general manager of a public power utility in Nevada, I was embarrassed by the outcome of the 2016 vote. It was clear we had not done enough to communicate with our consumers and members about the real impact of energy choice. Using our statewide association as a point of coordination, most public power utilities in Nevada worked hard to educate their consumers and members. Hundreds of meetings were held with town boards, city councils, county commissions, social groups, church groups, service organizations, trade associations, business groups and farm bureaus.
The message was simple: By our very nature, public power provides choice through locally elected boards and offers lower rates than the national average from for-profit retail energy providers. From the feedback at these meetings, it was evident that many people we serve had forgotten what makes public power utilities different and special.
Through educational efforts by public power utilities and many others, the November 6, 2018, general election in Nevada was a complete reversal of the previous results. Sixty-seven percent of the electorate voted against the energy choice initiative. Areas served by public power utilities saw as high as 91 percent voting against the proposition. These results were an affirmation of the value of public power.
Many have watched the events unfold in Nevada these past few years and wondered if a resurgence of 1990s retail choice wave was going to sweep the nation again. We hope the 2018 outcome in Nevada has derailed the movement. But, as with so many things, it is likely to resurface in a state near you. By definition, Ruralite readers are served by a public power utility. When someone proposes retail choice again, get the facts, which show that it does not deliver on its promises for areas served by public power.