Liberty PAC

Question 3 reads:Shall Article 1 of the Nevada Constitution be amended to require the Legislature to provide by law for the establishment of an open, competitive retail electric energy market that prohibits the granting of monopolies and exclusive franchises for the generation of electricity?”

On the surface, it sounds like a winning proposal. I know I prefer more choices. I'm definitely a firm believer that a competitive market creates better products. And if you've followed me at the legislature you know I've spent many sessions fighting against a system that favors monopolies and ologopolies.

I want to be clear that I’m all for embracing reforms that will ensure affordable energy choices to each and every Nevadan, and I'm excited that technology is quickly changing the way power can be delivered. To take advantage of these changes, we have to be able to quickly adapt to changing times. So with that being said, my biggest problem with the way Question 3 (Q3) is currently written is the fact that it wants to etch an amendment into the Nevada Constitution.

My friends, there is a time & place for amending constitutions, and this is not one of them. The dumping of concrete verbiage into our Constitution could make the issue of deciding future matters regarding energy usage less efficient for all Nevadans. It is my opinion that determining adjustments via the legislative process to a continually changing environment involving energy markets will be less problematic to implement if a monkey wrench isn't embedded into the process. I'll explain more below.

But first, how did Ballot Question 3 even come about?

Since I was there, let me give you some historical perspective on how the current structure to protect rate payers was added into place:

During 2001 when energy shortages were the norm, Assembly Bill 661 was passed to allow mega-consumers of power (one megawatt or more) to exit the grid and purchase from other sources so long as they agreed to pay an “exit fee.” The exit fee was vital because the infrastructure required to connect these large consumption users had to be built and maintained to meet demand, and by suddenly leaving the power provider, the initial cost to connect a user to the grid was never going to be recouped unless:

  1. users exiting the grid would agree to cover the cost incurred to initially tap into the grid, or,
  2. remaining rate payers (you & me) would absorb the cost to allow others to escape their obligation.

So that you and I wouldn’t get stuck paying somebody else’s bill, AB661 required that the mega-users who required all that initial infrastructure in order to “light up” would agree to pay a cost decided by the Public Utilities Commission. This apparently was viewed as a fair deal by others who decided to pursue other energy alternatives, including MGM and Wynn Resorts who paid proportional shares of exit fees to ensure that you and I would be protected.

Some power-guzzlers however didn't like the rules, and balked at the exit fees that were required to protect the smaller rate payers. Any guesses who they might be?

Well, that answer becomes obvious when you study the backers of a group calling themselves "Nevadans for Affordable Clean Energy Choices.” They're the folks funding all those advertisements currently promoting the passage of Q3. I was curious who all these “Nevadans” were that were buying the ads. Upon searching, I discovered that the ad buys really didn't involve any run-of-the-mill you-and-me type Nevadans at all, but consisted mainly of two large corporations who donated nearly $20 million within a few weeks’ time.

So anyway, these two “Nevadans,” Las Vegas Sands and Switch, happen to be a pair of the largest power consumption users in the State of Nevada, the same "Nevadans" who also have major disputes with the way the current arrangement was originally structured by lawmakers during the 2001 legislative session to protect you & me and all the other mom & pop rate-paying establishments struggling just to stay even.

So ask yourself, are you willing to be drawn in by campaign advertisements that are bought and paid for by some self-serving casinos? The gaming industry has been in the business of producing slick marketing ads ever since the first doors opened. You've seen them: happy people pulling the handles on slot machines and clapping as endless 777’s roll up again and again, joyful folks tossing winning dice as bystanders cheer, patrons displaying blackjack hands as chips continue to slide their way…everybody’s a winner when casinos are blasting their ads across your TV screen!

Except, you & I know better...

So, ask yourself, will these political bought ads be any different when it comes to promoting one’s own interests? Look, we all know that Gaming is not in the business of dumping millions of dollars into a project to benefit your pocket book. Gaming prevails when you lose your money. Simple math! Therefore, these campaign ads promoting Q3 should be viewed with skepticism.

“But Don, isn’t it possible that passage of Q3 could benefit all rate users?”

Tough to gauge. I’ve read through different lengthy studies to determine an outcome, and the best answer is plenty of uncertainty is on the line. I'll admit that neither sides are really being sincere when shaping their campaign ads to sway your vote, but not much can be learned in 60 seconds anyway.

In my search for neutral opinions, I consumed a report released this month by the Guinn Center for Policy Priorities titled, "Restructuring the Electricity Market in Nevada? Possibilities, Prospects, and Pitfalls." Their report is more than 100 pages long with nearly 400 footnotes, and they took a very thorough approach to explain the complexities involved in restructuring energy markets and how other states were affected. The Guinn Center also published a 21-page voter information guide that can walk you through Q3 at a quicker pace, and both publications are available on their website.

Their research was a lot to digest, but to sum up their findings in a nutshell, the Guinn Center finds that “evidence on the effect of restructuring (energy choice) on electric prices is mixed and inconclusive. It is impossible to predict what will happen to electricity rates (and a ratepayer’s electricity bill) should Question 3 pass. Our examination of other states’ experiences with rates demonstrates that some customers benefit from energy choice, while others encounter adverse effects.”

Okay then, that wasn't much help in making a yes-or-no ballot decision, but more disconcerting however was their revelation that “the procurement of electricity has different impacts across ratepayer classes. Large commercial and industrial (C&I) customers tend to enjoy lower rates, relative to their residential and small commercial counterparts, under both vertically integrated utilities and energy (retail electric) choice.” Furthermore, the Guinn Center adds, “Residential and small commercial consumers, who typically are unfamiliar with the energy choice structure, may be disadvantaged under restructured markets in the absence of strong consumer protection regulations.” Gulp!

How about you then? Are you prepared to roll the dice to amend our Constitution? I certainly have my reservations. Realize this folks, of all the states that have implemented the restructuring of energy markets, not one of them ever did so through a constitutional amendment. Good thing for them, because of all the states that did implement restructuring, several of them had to repeal provisions either whole or in part due to destructive unintended consequences that arose during the revamping process.

Now, pay close attention here -- the Guinn Center also noted: “Using the Nevada Constitution as a regulatory tool forces the Nevada Legislature to proceed with restructuring. Even if legislators find that restructuring is infeasible, the constitutional imperative takes precedence. Should Nevadans become concerned about the prospects of restructuring, they would have to repeal the constitutional amendment with another constitutional amendment. This would entail circulation of a new petition to obtain the requisite number of signatures to appear on the ballot and then passage in two successive elections.”

And therein lies the bigger danger!!  I know a thing or two about the circulation of petitions, and here in the State of Nevada, the art of moving a petition forward has unfortunately become a rich man’s game. So, while you & I are getting pummeled, the big money-backers and their attorneys will already be prepared to hamper any attempt to derail their gravy train. The enormous cost of gathering signatures and litigating against lawsuits will most assuredly banish the smaller rate payers into a constitutional choke-hold, while the larger beneficiaries bunker down and circle their wagons.

So I reiterate, take these proponent ads with a grain of salt when you view them. Gaming and other large corporations are no doubt confident they will immediately come out ahead, or they wouldn’t be banking this measure. As for you and me, the odds of crapping out are much higher.

My friends, those of you who followed me throughout my years as a Nevada lawmaker are very aware that I have stood up for the hard-working taxpayer. Let me tell you from experience; the gaming industry has only lobbied to PROTECT ITS OWN INTERESTS, not yours or anybody else. Every time tax increases were on the table, the gaming interests were in my office lobbying to tax everybody else but themselves, and that’s the hard-cold brutal truth.

As it stands right now, I’ll be voting no on a constitutional amendment to permanently risk the livelihoods for the majority of rate payers, because it doesn’t take a constitutional amendment to offer rate payers more choices and healthy competition, and because there is no current constitutional crises as it pertains to energy power in Nevada. Truth be told, Nevada rate payers enjoy rates that are far below the national average to have power delivered to their homes. Prudence is the word for the day, and instead of jack-hammering unnecessary amendments into our Constitution, I will instead work to advocate for legislative measures to find safe and affordable energy options for ALL Nevadans.

November is fast approaching. I want to get the word out to all voters regarding Q3. I’ll also be busy advocating for the election of conservative leaders who are dedicated to protecting your liberties. I hope you’ll join me in this effort.  Please consider donating to Liberty PAC so I can continue this mission into November. Thank you for being a supporter!

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