Building Nevada - August 2009

Utilities

Powering for the future

by Howard Riell

    The federal stimulus monies coming to Nevada will be, for the state’s utilities, not so much a handout as a hand up.

     Like their counterparts around the nation that have seen growth grind to a halt over the last year, Nevada’s utilities that successfully vie for a share of the funds will be using them primarily for smart grid and transmission projects, as well as job training and education. The monies, in the form of grants, loans and loan guarantees, should also enable utilities to obtain cheaper financing in the months to come, a crucial consideration given the economy.

    Still, when evaluating the forces impacting the state’s utilities, says Jo Ann Kelly, chairman of the Public Utilities Commission (PUC) of Nevada, it remains “hard to single out the economy because there are a couple of other factors at work. As you can well imagine, the majority of retail sales that are generated are during the summer, it’s an air-conditioning load. That has been affected not only, I’m sure, by the economy but also by a generally cooler summer.”

    Another dynamic affecting the utilities, Kelly notes, is that Nevadans’ usage patterns have changed. “The conservation message is taking hold and people are altering their patterns enough that it will make a difference.” She remains hopeful that the millions of dollars being spent “to encourage people to weatherize their homes, get rid of that second refrigerator, use more energy-efficient appliances and things of that nature” are paying off. Indeed, Kelly points out, “There has probably been a 1% to 2% reduction in sales in the southern half of the state, and a little more than a 2% reduction in the northern part.”

Kick-Started and Moving

    The purpose of the stimulus package “was to get the economy kick-started and moving rapidly,” says Tony Sanchez, corporate senior vice president of public policy for NV Energy. “When Congress passed that bill, it went to the agencies that had to issue requests for proposals (RFPs). Those are starting to come out more and more now because the agencies have had three months to get everything together. They’ve got the money [coming], now they’ve got the rules on how they are going to access proposals for it, and we are exploring everyone that comes out.”

    Utilities will use stimulus monies to finance a variety of projects, mostly clean-energy or smart grid initiatives. “The money is distributed by the administration,” explains John Summers, a spokesman for Nevada Sen. Harry Reid. “When it comes to money specifically for utilities or development of renewable energy, most of that is going to come from competitive grants. There is a deadline for submission for each, and then the utilities compete.” There is also, he adds, “some money for programs that goes to the governor and the state distributes accordingly.”

    Tory Mazzola, Communications Director for U.S. Senator John Ensign, points out that of $4.5 billion in stimulus money, $3.2 billion “is for investment grants, so there is a big pot of money out there for utilities. They will be the largest recipients of this money.”

    “A lot of U.S. cities and counties will receive federal stimulus dollars that will be used for renewable energy and energy conservation projects,” says Jason Geddes, Ph.D., Environmental Services Administrator for the City of Reno. “Part of the goal is to leverage local funds, so a lot of us have secured rebates through NV Energy and are using them as the matching funds.” Reno has been awarded $2.1 million for energy efficiency projects as part of a community block grant, Geddes says. “It was authorized back in March. We are waiting for the money to arrive.”

    Among the energy projects for which NV Energy will be submitting RFPs are a so-called smart grid project, which Sanchez says will allow customers to “control their energy usage. It would give them information in real time, and really lets them control their energy usage, and ergo the energy bill.”

    “You have to remember that a good portion of the outlay when it comes to smart grid is on the meter side, the customer side of the system,” notes Kelly. “In general, Nevada, because of all the growth we’ve had in the last few decades, has pretty modern meters in contrast with some of the older cities, particularly in the East and Midwest.”

    Over the past decade, Sanchez recounts, NV Energy has all but led the nation in the growth of its customer base, rising at an average of 4 to 5 percent annually. Over the last 12 months, however, that growth has slowed to about 1%. “But at the same time that has provided an opportunity for us to take a deep breath and reassess our ongoing plans.” In fact, the utility will soon present the commission with its Integrated Resource Plan, its vision of the next 20 years.

    Also in NV Energy’s plans for the immediate future is the One Nevada transmission line, or ON Line, a 235-mile connection from Ely to Las Vegas that would connect the North and the South for the first time since Nevada Power, Sierra Pacific Power and Sierra Pacific Resources merged in July 1999. If and when it happens, the ON Line will let the South access the North’s geothermal renewable energy, and let the North share in the South’s abundant solar energy.

    In addition, Las Vegas stands to gain access to the large wind project upon the Nevada/Idaho border called the China Mountain project, a 200-megawatt wind-energy initiative that will use state-of-the-art, large-scale wind turbines to produce electricity for delivery to a nearby NV Energy 345 kV transmission line.

Southwest Alternatives

        Southwest Gas plans to go after about $2 million in stimulus money together with some partners – one is the Propane Education and Research Council -- with an eye toward research and development on gas heat pumps and combined heat-and-power systems, according to Senior Vice President and Chief Knowledge and Technology Officer Dudley Sondeno. The work they have planned would provide “an overall benefit not only to Southwest Gas and its ratepayers, but to the entire industry.”

    Southwest’s Energy Efficient Technology (EET) Department is involved in several initiatives having to do with alternative energy, Sondeno says. It is, for example, involved in a pair of solar projects in its Arizona jurisdiction. “We are a three state utility. We do things that benefit all of our rate payers across the three states.”

    EET is also focusing on green initiatives, trying, according to Sondeno, to become involved “in many of these green-type projects -- projects that utilize natural gas in its most efficient manner, combined with things like solar and other renewables.” The group has had discussions with Desert Research Institute, among others, “so yes, we are involved in a number of things.”

    “Southern Nevada particularly, but Northern Nevada as well, has very abundant days of almost cloudless sky that can be utilized for solar thermal energy and more,” says PUC’s Kelly. “We have almost 500 MW of geothermal projects under contract in our state, almost all in the north, because that’s where it’s located.”

    One of the issues with renewable resources, Sondeno concedes, is that “they tend to work only when the wind blows or the sun is out. What we want to do is show that by utilizing these renewable technologies with natural gas as a backup, you can have equipment that will provide heating and cooling consistently so that you don’t have to have an entire conventional system lying in reserve as a backup.”

About Drought

    While Nevada is still in the midst of a drought, everyone is stepping up to reduce water usage.  According to the Southern Nevada Water Authority (SNWA), water consumption was 20 billion gallons less in 2008 than in 2002.  That is despite 400,000 more people moving to the area and substantially more tourists.

    This impressive drop in water usage is due to SNWA’s aggressive conservation campaign as well as the community’s increased awareness of going green.

    According to Kristen Howey, spokesperson for SNWA, the outcome for Southern Nevada is manageable.  “It’s looking pretty good,” she said, “They’re anticipating about 90% of the annual average of water going into Lake Powell.  On the flip-side, right now, Lake Mead is only about 43% full.”

    As far as SNWA is concerned, they won’t be getting any of the stimulus money and will continue to face the challenges of meeting the needs of Southern Nevada’s water demands as they always have..

    The water situation in Northern Nevada “is good for this year,” promises Jeffrey Tissier, CFO of the Truckee Meadows Water Authority (TMWA) in Reno, which serves the greater Reno/Sparks area and portions of Washoe County. “If we have another dry winter we are going to have to dip into our drought reserves a little early next year.”

    “Nevada is the driest state in the union,” adds Kelly. “I can tell you that with any generation facility that is built” water usage is a determining factor in both its size and location.

    TMWA usually dumps water from Donner and Independence Lakes at the beginning of the fall to make room for winter runoff. There is also an aquifer storage and recovery project through which water is stored underground. In all, the state’s carefully conceived drought plan is designed to handle nine years of dry weather.

    TMWA is currently in the construction phase of the Mogul Siphon Bypass Project, which was developed to eliminate dependence on the old infrastructure that brought raw water to Chalk Bluff, the region’s primary water-treatment plant.

Cautiously Optimistic

    The PUC in June allowed NV Energy to raise revenues of $221 million based on its recent capital investments. Commissioner Rebecca Wagner, who voted in favor of the order, found herself walking a fine line to protect ratepayers while helping the utility maintain a strong position financially in order to avoid having its credit ratings downgraded, which would almost certainly render locating future financing for new projects much more difficult.

    Armed with stimulus dollars, the remainder of this year and 2010 represent more than anything else “an opportunity” for the state,” says Sanchez. “The number-one mantra of our company is to utilize more energy efficiency measures to serve our customers better. Another is to utilize renewable energy and third is to utilize the most efficient fossil fuel generation; for example, natural gas lines.”

    It is in the area of energy efficiency, Sanchez notes, Nevadans are going to see an immediate benefit. “There is going to be a lot of training of the workforce fostered through [Senate Majority Leader Senator Steven] Horsford’s legislation,” he says. “Those folks are going to be doing weatherization projects and home energy audits. They are going to be out there in what is being called the Green Collar environment, so you are going to see a lot more energy efficiency, which is a good thing. Every watt that we don’t have to generate means we don’t have to build another power plant. It goes to protecting the environment, but it is also the most cost-effective way to serve our customers.”

    Reno’s Geddes sees utilities, if not thriving, at least “cruising along.” They were built on the strength of the residential market and when that held up, they held up. But they don’t seem to be drifting backwards.”

    A second round of stimulus funding would be “a gift from heaven,” he adds. “Part of accessing this money is [utilities’] ability to come up with energy plans and conservation strategies for the long-term on how we can all lower the power bills. Another round of funding to help expand what they’ve done would be very helpful. In these economic times we don’t have the money to do a lot.”