After Hectic Legislative Session, Some Clarification on ‘NVision’

by JERI CHADWELL

Nevada’s 77th Legislative Session brought the Silver State into the national spotlight on numerous occasions as both legislators and individual pieces of legislation made headlines around the country during the four-month session.

Early in the session, the Legislature voted for the first time in its history to expel one of its members. Assemblyman Steven Brooks was ousted from his seat after several arrests and is currently facing two felony charges in California for evading an officer and resisting arrest during a car chase that took place in March.

Sen. Kelvin Atkinson publicly came out, saying: “I’m black, and I’m gay,” prior to the Senate floor vote on a resolution to repeal Nevada’s limitation on marriage. That measure passed in the Assembly on May 28 and is now one step closer to a potential public vote in 2016.

In the final days of the session, Sen. Joyce Woodhouse’s departure from the capitol to be with her ailing husband left the Senate in a 10-10 partisan split with many hot button issues still on the docket.

And in the days following the Legislature’s adjournment, it was Gov. Brian Sandoval who made the national headlines when he vetoed a bill that would have mandated background checks for the private party transfer of firearms and signed another bill to allow for the establishment of medical marijuana dispensaries.

Considering all of the commotion that marked the 77th session, it’s no wonder that some bills may have escaped the public’s attention.

This wasn’t precisely the case with Senate Bill 123. The measure — dubbed “NVision”— received a fair amount of media coverage; however, the provisions of the bill that will require Nevada’s largest energy provider, NV Energy, to retire 800 megawatts of coal-fired generating capacity by 2019 are complex. Now that things in the capitol have calmed down, it’s a good time to provide some further clarification on SB123, including what 800 megawatts of generating capacity really means and what the retirement of the coal-fired plants that currently provide that capacity will mean for Nevadans.

A recent interview with NV Energy lawyer Shawn Elicegui helped shed some light on how Nevada’s energy needs are met and how the new emissions reduction and energy replacement plan outlined in SB123 will proceed over the next six years.

Jeri Chadwell (JC): The bill requires that 800 megawatts of coal-fired generating capacity serving southern Nevada be retired by 2019.  Is the Reid-Gardner plant (max capacity of 557mw) the only coal-fired plant that serves southern Nevada?

Shawn Elicegui (SE): No, the Navajo Generating Station, a coal-fired generating facility located in Arizona, also provides service to southern Nevada.  Nevada Power Company d/b/a NV Energy (“NV Energy” or “NVE”) owns 11.3 percent of the Navajo Generating Station.  NVE’s share of the Navajo facility equates to about 254 megawatts (“MW”) of peak capacity. The Salt River Project (a provider of electric service in Arizona) operates the Navajo facility.

Under Senate Bill 123 (“SB123”), NVE must file an emissions reduction and capacity replacement plan with the Public Utilities Commission of Nevada (the “PUCN”).  Among other things, the plan set forth the manner by which NVE will retire or eliminate its ownership interest in 800 MW of coal-fired generating capacity by 2019.  Currently, NVE anticipates proposing that it will eliminate its 11.3 percent ownership interest in the Navajo Generating Station as the third-prong of the company’s emissions reduction and capacity replacement plan.  If the Commission approves the emissions reduction plan, NVE would eliminate its ownership interest in the Navajo facility by December 31, 2019.

JC: Does the 800 megawatts of generating capacity (outlined in the bill) translate to a maximum output per hour? For example, the NV Energy website states that the North Valmy Generating Station has a max generating capacity of 522 Mw.  Is that per hour when the plant is operating at 100% capacity?

SE: Generally, there are two types of “MW” ratings.  The “nameplate” rating refers to the manufacturer’s rating of the turbines.  The “summer capacity” rating refers to the output of the facility at the time of peak demand.  Often, the summer capacity rating is lower than the nameplate rating because of many factors, such as ambient air temperature and altitude.  The North Valmy rating (as well as the ratings referred to in the coal-retirement and NVE-owned replacement capacity sections of SB123) refer to the summer capacity, or planning rating.

With respect to either rating, both refer to the “ability” of the plant to produce energy.  Thus, a 100 MW facility has the ability to produce, at any given point in time, 100 MW of electricity.  If the 100 MW facility produces 100 MW every minute of every day for a year, it will produce 100 MW multiplied by 8,760 hours or 876,000 MW hours of electricity in a non-leap year.

Stated differently, a 100 MW plant maximum output at any time would be 100 MW.  If a 100 MW plant ran for 1 hour it would produce 100 MWh.  If the same 100 MW unit ran for 2 hours it would produce 200 MWh.   If the same 100 MW unit ran at half load or 50 MW for 2 hours it would produce 100 MWh (50 MW times 2 hours).

JC: How often to NV Energy’s power plants operate at 100% capacity?

SE: NVE operates its power plants when the cost of producing electricity is lower than the alternative (e.g., purchasing energy from someone else).  Historically, coal units have run at a very high utilization rates because coal is less costly than other alternatives.  However, when gas is at lower cost than the coal, the coal units are used less often and the gas units are used at a higher rate.

None of NVE’s units, however, operate at “full load” every hour of every day.  Indeed, no generating unit in the country operates at full load every hour of every day.  Prudent operation requires planned outages to complete necessary maintenance.

A good analogy for thinking about capacity is a car.  One never uses the full capacity of their car, driving 24 hours a day, 7 days a week with a passenger in every seat.

JC: Am I correct in assuming that the most common reason for fluctuations in peak demands for energy arise from the need for things like air conditioning in the summer?  If not, what causes fluctuations in demand?

SE: Loads fluctuate depending upon when the customer uses electricity and for what purpose.  Air conditioning drives much of the fluctuation during any summer day especially in Las Vegas.  Other causes are due to when businesses are open, for example casino and mining customers operate all day so their loads are much more constant.  The northern system operates at about 70% load factor where the southern system operates about 45 to 50% load factor.  Load factor is a measure of the actual usage divided by the maximum for the year. 

JC: How much generating capacity does the average coal-fired power plant have?

SE: Each coal unit has its own rating depending upon the size of the power plant and the generator that produces the power.  The Reid Gardner units 1, 2, and 3 have a rating of 100 MW each and Unit 4 has a rating of 255 MW. 

JC: Can other types of power generating methods compete with that capacity—wind, geothermal, hydroelectric, solar?

SE: Other types of generation do compete with coal or natural gas facilities.  However currently these technologies are more costly, that is one reason why the State adopted a renewable portfolio standard so that thee other technologies have a place in meeting the energy needs of our state.

JC: Is there any way to make a projection of how much it will cost to acquire or construct the necessary plants to replace the generating capacity of current coal-fired plants?

SE: The financial modeling of the plan looks over a 30-year period of time and includes the construction of various company owned generation assets to replace the early retirement of the coal facilities.  The financial modeling of the plan showed that SB 123 will cost roughly $390 million more than the alternative of not retiring the coal units early.  If the NVE is able to acquire a facility at a lower cost than constructing a unit it will reduce the cost of SB123 compliance.

JC: Other media outlets have discussed the potential creation of new jobs. Is it possible at this time to put a number on how many might be created as a result of the emissions reduction and capacity replacement plan?

SE: SB123 will create new jobs to build the 550 MW of new generation and associated interconnection facilities if the NVE builds the new facility.  In addition, construction and maintenance jobs will be created to construct the 350 MW of renewable generation also specified in the bill.  It has been estimated that the bill will result in an estimated 4,000 jobs created to construct the facilities.  The actual number will depend upon the type of generation built.



Categories: BILLS, NEWS

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