[Editor's note: This is the second in a series of articles by reporter John Taylor that examines the energy industry in and around Mesquite. Also see Mesquite Citizen Journal story OPD Hit With Credit Downgrade]
Officials of Valley Electric Association are making a daring move that will catapult them into the hottest solar market on the West coast, make them a premier exporter of solar generated power to California and another utility considering breaking away from Nevada's power grid. If everything goes according to plan, Pahrump will plug into the California system in January.
In 1963, the tiny Amargosa Valley Electric Cooperative and the fledgling Pahrump Valley Utility merged in order to create a power distribution system between the two valleys. Today, those utilities are the Valley Electric Association (VEA) cooperative, a $52 million dollar a year company with 350 miles of transmission lines over 6,500 square miles, an area larger than Connecticut and Rhode Island combined.
As VEA began to grow, it immediately ran into problems with Nevada Power, now known as NV Energy. When the utility began building connections in Pahrump, Nevada Power rushed in to also lay electrical transmission lines. Nevada Power attempted to beat the small utility to the punch for customers and when that seemed destined to fail, it joined with Southern California Edison to file lawsuits against VEA. During this time, the VEA was able to secure a loan from the federal government that turned the tide. VEA won out and finally became the primary electric utility for the area.
While Overton Power District is a non-profit general improvement district, VEA is a cooperative. In a cooperative each electric customer is also a member of the co-op and a part owner of the utility with equal say among other members. A co-op has several guiding principles: democratic control by members; economic participation by members; education, training and information provided to members; cooperation with other cooperatives for strength and unity: and working toward policies for the sustainable development of the community.
Like OPD, Valley Electric Association does not generate its own electrical energy, it buys power on the open market. That is where the similarity stops.
In 2011, after a lengthy and complex process, VEA executed a memorandum of understanding with California Independent System Operator (CAISO) that will form the basis of allowing VEA to become a member of the California association in January, 2013. CAISO is one of only ten independent system operators in North America that coordinate generation and transmission across large geographic area to keep supply and demand for electricity in balance.
The partnership with CAISO may have begun in 2006, when customers of VEA asked company management “why aren't we adding renewables to the company?” Management responded that it was not economically feasible.
“That question got us thinking,” said Tom Husted, Chief Executive Officer of VEA. “Our staff worked with our members to put together an exhaustive business plan to look at renewable energy. The company decided to take the micro approach rate than the macro approach. The first step was the water heater program. With the help of our members, we found sufficient interest to launch the program and while it did not put energy back on the grid, the averted energy was a great incentive.”
Susan Fisher, Executive Vice President of Government Relations and Marketing, said, “In 2009, VEA officially launched the largest domestic solar water heater program in the nation by providing solar panels and water heaters to its members at our cost and financing the expense at zero interest. To date, we have more than 700 units in place. At VEA, we believe that working with renewable energy is not only the politically correct thing to do, it is the “right” thing to do. Our members support our efforts to “green” the system.”
Fisher added that first step launched them into renewable energy.
That began the journey for VEA on the renewable power path and Fisher said, “by joining the CAISO, the cost of transmission construction will be spread throughout the CAISO system saving our members millions of dollars. This will help us keep our rates stable and provide VEA with funds for future expansion.”
VEA customers pay an average of $135 per month for electricity compared to Overton Power District customers who pay an average of $150 per month.
Fisher added that in 2011, VEA created a subsidiary, the Valley Electric Transmission Authority, which will lower future revenue requirements significantly and provide the transmission services necessary to connect to the Bright Source Energy project to the grid. Every utility looking to embrace renewable energy must first resolve its transmission problem. In other words, how to get that newly produced energy from the source to the end user.
Bright Source, a major builder of solar plants, plans to build two 250 megawatt solar plants on Tecopa Road near Pahrump.
When utilities begin to reach the state-mandated renewable energy goal, there will be a tendency to reduce the demand for building new renewable projects. The other option is to sell the energy to California. That is what VEA plans to do.
Husted said, “The solar projects are what allow us to add kilowatt sales, to add jobs and economic opportunities, and to help VEA defray future rate increases. We view renewable energy in Nevada as an important factor in the diversity of Nevada's economy, much like the natural gas industry has done in other states.”
“Rejecting renewable energy just on the basis of the high cost does not take into consideration that a truly diversified portfolio of generation resources eliminates some market risk and thereby provides for greater rate stability,” said Fisher.
If Fisher is right, Valley Electric Association will become a major player in Nevada's energy plans.
The Bright Source project is a massive solar thermal system built near Primm in the California Mohave desert. It is designed to provide solar energy with low environmental impact to meet the goals of California's clean energy act, power 140,000 homes, and will provide 1,400 jobs during its construction which should be completed in 2013. Bright Source also has interest in the planned Amargosa 500 megawatt solar plant near Pahrump.
In 2008, Bright Source company executives attempted to partner with Overton Power District for a solar project near Overton airport that would produce 1,200 megawatts of energy and go online in 2012. Bright Source was willing to work with OPD to finance an upgrade for OPD transmission lines and offered to reserve a portion of the power for OPD to use as a green option for its customers. The deal fell through over right-of-way issues with OPD and government regulators.
VEA's web page currently has 20 current job openings and Husted has been invited to share the stage next month at the National Clean Energy Summit in Las Vegas with former President Bill Clinton and Senator Harry Reid to discuss energy policies.
So what does the future hold for VEA? “There is a gold rush of sorts,” said Stephanie McCorkle, spokeswoman for CAISO. “By state law, California must get a full 33 percent of its power from renewable resources by 2020. There is enough transmission to reach that goal. At some point, there will be enough generation that will make it harder for renewable projects to get on the (California) grid.”
Nevada Governor Brian Sandoval has repeatedly said Nevada is primed to become an important energy exporter to states like California which have a huge energy appetite.
“Most industry experts view is that California with have difficulty meeting its 33 percent goal with in-state energy resources,” said Kevin Smith, CEO of Solar Reserve, a California based solar company that is building a solar plant in Tonopah, Nevada. “That is what makes it a good market for Nevada.”
Solar Reserve was interested in building a solar plant on Flat Top Mesa just outside of Mesquite. The plan did not generate much interest from local Overton Power District officials or Mesquite public officials. Solar Reserve went elsewhere.
Like VEA, Boulder City’s utility department has eagerly embraced solar power. Solar companies were welcomed by city officials and, as a result, it will receive $12 million a year just in lease payments from solar projects that have already been built. In addition, the city was presented with a gift of $500,000 from a solar company to upgrade city buildings using the renewable energy of their choice.
“In 20 years from now, future city councils and the people will thank Mayor Roger Tobler and this council for what they have done,” said Scott Crider, an executive with solar company Sempra Energy. “Solar power is here to stay.”
One thing is certain: with states requiring that future energy needs be fulfilled by a significant percentage of renewable resources and the lengthy permit process requirements that a utility has to go through, it is clear that for progressive power companies, they cannot wait any longer. The time for change is now.
“If you are not in the renewable energy game right now, you will be left in the dust,” said Bob Cable, manager of the Nevada Solar 1 plant in Boulder City.
According to the National Clean Energy website, a national energy expert commented, “If we didn't pay a little bit more for new technologies, we would still be using typewriters instead of computers.”
[Editor’s note: While the residents and businesses of Mesquite are completely dependent on electrical rates determined by Overton Power, this series will look at other electric utilities near our community and their approach to providing power to their customers, their look at the future and how it will affect their customers. The series will finish with a second look at Overton Power District.]