Nevada Ratepayers Left Twisting in the Wind

A recent report from Nevada provides a cautionary tale for communities and states that hope to use ratepayer dollars to find experimental energy projects.

NV Energy is a public utility that generates and distributes power for customers in northern and southern Nevada, including greater Las Vegas. As part of the company’s efforts in the renewable energy sector, NV Energy initiated a program called Wind Generations that provides ratepayer-funded rebates to install wind turbines across the state. Across Nevada, 150 such turbines have been installed under the rebate program created by a 2007 act of the state legislature. Most of the rebates for the program are subsidized by customers in northern and rural Nevada who are customers of NV Energy’s sister company. To put it mildly, the $46 million program has fallen short of expectations for some communities.

In March, the Reno Gazette-Journal reported that one turbine that cost the City of Reno $21,000 just to install ended up saving a whopping $4 on the city’s energy bill. In total, Reno officials bought $416,000 worth of turbines that have resulted in a paltry $2,800 in energy savings.

This result was not without warning. Last May, a managing member of Reno’s Clean Energy Center, Rich Hamilton, told the Public Utilities Commission of Nevada that the structure of NV Energy’s program “could allow unscrupulous developers to sell turbines to unsuspecting customers who will not generate electricity from an installed turbine because there is no wind to power the turbine.” Turns out that Hamilton was right, with ratepayers left holding the bag. There were other problems, too.

“These manufacturers, when they gave us the turbines, they said they were designed to be mounted on a parapet at this height, and that’s what we did,” said Jason Geddes, who runs the city of Reno’s renewable energy program. “But when we started getting actual wind flow patterns, we realized their claims were wrong.”

As part of its overall renewable energy effort, Reno is spending $20 million on projects such as solar and wind installations and energy efficiency efforts. In fact, the National Resource Defense Council in 2010 named Reno one of twenty-two ‘Smarter Cities’ in the country when it comes to renewable energy, even praising the city’s installation of wind turbines on top of City Hall as part of its analysis. Spending $21,000 to save $4 doesn’t sound too smart to us.

To their credit, regulatory officials in Nevada are now working to improve the rebate program, hoping to focus ratepayer dollars on wind-rich areas and away from urban centers like Reno. In the meantime, hundreds of thousands of dollars in ratepayer funds have been squandered on projects that were doomed to fail. Nevada appears to be learning from its failures. The question is will others learn from Nevada?