By Lauren Rosenblatt

Nevada, with its modern grid, abundant sun and business environment that is friendly to upstart technologists, stands at the cusp of a great leap forward in the electricity industry. Making that leap means scrapping both the Energy Choice Initiative (Question 3 on this November’s ballot) and also the broad dominion of our regulated electric utility, NV Energy. Neither offers Nevada the electric service of the future. The good news is that we have opened an alternative path that puts the future within our reach.

Our electric sector today, as well as the putative restructuring envisioned by Question 3, are both based on an economic and legal model conceived for the electrification technology of the early 1900s. That model depends on central planning for a wide-area customer base, which ensures long-term investments in large-scale generation and the grid that delivers it. As a result, we pay for one-size-fits-all electric service from a single provider, which cannot be responsive to individual consumer preferences on energy sources, service options, or prices.

The constitutional amendment language of Question 3, providing five years to implement competition in supply, in fact ties Nevadans to the same industry model. It changes only which suppliers we pay for procuring electricity from large-scale, legacy generators, without any guarantee that energy prices will go down. At best, it assures ratepayers will shoulder the large expense to convert the relevant retail market rules, while promising only that energy prices will fluctuate with the wholesale market prices more than they do today.

Nevada has the opportunity to lead an electricity revolution that starts now, not five years from now. Advances in electricity production and delivery will be transformative: most of us don’t frequently think about the electricity service readily available to us and our fast-multiplying electric devices. But remember, we didn’t dwell on our telephone service before the advent of the cell phone, and now we carry with us wherever we go the ability to communicate with anyone, anywhere. We did not appreciate how cell phones changed society until we, quite literally, held it in our hands.

The electricity revolution is here in the form of distributed energy resources and technologies for distributed grid operation. These technologies promote real choice – for example, individual energy independence, or like-minded individuals minimizing their environmental footprint or accepting customized reliability in exchange for incubating a new grid technology. Continuously-decreasing prices for small-scale generation bring the energy resources closer to home, displacing delivery costs and also challenging the economics of centralized power generation. Energy losses across our transmission and distribution system average more than 6 percent -- that is the energy equivalent during peak load hours on the NV Energy system to power approximately 160,000 homes. Microgrids, smaller and independently operated sections of our distribution grid, avoid these losses while allowing customization of generation, operation, and services to a single customer or small group of customers. Digitalization of operations needed to scale it all is supported by the Internet of Things and new developments in artificial intelligence. This new approach to operations means smaller investments with shorter time commitments, allowing for adaptation to new technologies as they arise.

To open the door to this revolution, we must start now by changing the legal and economic underpinnings of the business of electric service. We should reject the five-year time constraint of Question 3, and commence immediately with redirecting our legislative and regulatory attention towards a distributed electric sector and the new energy economy.

Incremental but continuous development towards a distributed electric sector requires devolving our distributing system into a series of adjoining microgrids. Distributed ownership of the grid must nonetheless be subject to some controls. Our regulator must continue its competent oversight in technical matters of the grid, setting standards for interconnections and for operation of the grid equipment. The regulator should also be the licensor of providers and enforce their compliance with minimum standards of service. Importantly, the regulator would oversee market mechanisms, such as auctions, designed to balance investments to meet demands and technological advances with fair pricing.

The new economics of a distributed grid must continue to ensure affordability and access to service in the event of grid or market failure to do so. This could take the form of a single, regulated, cost-of-service provider that looks like a scaled-down version of our current utility. The regulated provider would act as an independent service operator balancing the various microgrids and their resources. The independent operator would also maintain on behalf of the microgrid operators a margin of supply insurance for unforeseen outages, as well as operate those sections of the grid not yet acquired by alternative providers. Through the regulated provider fulfilling these functions, the regulator would have insight into whether the market is functional and addressing demand or requires changes to improve competition and service.

We will need laws enabling data-collection, data-sharing, and data-analysis while controlling for privacy concerns. Data analysis and the application of artificial intelligence must have the telecommunications to support it and be permitted to interact with both the grid and individual consumers in real time. Some data should perhaps be open to those seeking to analyze for and derive new energy services.

Finally, policies embedded in the new economics of electric service should be adaptable to advances in technology. Governments and subsidies could offer incentives, but those should be designed with recognition of what is currently driving the economics of electricity and with perspective of how continuously those drivers are changing.

Nevada can show the way to the twenty-first-century electric sector. Although Question 3 brings change, it is not the right kind of change. Rather than a five-year detour that does not belong in our state Constitution, we need statutory changes to shed the utility model that is no longer working for us. Let’s ask our 80th (2019) legislative session to lead a vision of a new, distributed grid economy by enunciating the policies and mandates to support it. That leadership could start with directions for pilot projects involving microgrid operations and related grid operation technologies, and also an independent inquiry into the business, economic, and regulatory models needed to enable them. Also, Renewable Energy Portfolio Standard for Nevada continues to be important, but a portfolio target for distributed resources will help displace the entrenchment of NV Energy through its long-term investments in grid-scale supply.

In this way, we signal to our state decision makers that the energy markets of the past – which both Question 3 and NV Energy impose upon us – are no longer good enough for Nevadans. And by embarking on the development of a new energy economy, we are truly investing in Nevada’s energy future.

Disclosure: NV Energy has donated to The Indy. You can view a full list of our donors here.

Lauren Rosenblatt is a Principal of e-centricity, LLP, a Nevada partnership offering expertise at the nexuses of energy, transportation, technology, and connected communities.