RPS: A Recipe for Economic Decline

Scheme to cost Nevadans $2.275 billion over 12 years

Executive Summary

In 1997, Nevada policymakers amended state law regulating public utilities — NRS Chapter 704 — to implement a Renewable Portfolio Standard (RPS). Under that standard, NV Energy (formerly Nevada Power and Sierra Pacific Power) must use eligible renewable energy resources to supply 25 percent of the total retail electricity it sells by 2025, of which 6 percent must be met with solar energy. Subsequent legislation allows energy-efficiency measures to satisfy 25 percent of the RPS mandate. 

To estimate the economic effects of these RPS mandates, the Beacon Hill Institute was asked to employ STAMP®, the Institute’s State Tax Analysis Modeling Program. Conservatively, this study utilizes the optimistic estimates of renewable electricity costs and capacity factors provided by the U.S. Energy Information Administration (EIA), a division of the Department of Energy.

It also, however, provides three estimates of the cost of Nevada’s RPS mandates — low, medium and high — by  employing different cost and capacity factor estimates for electricity-generating technologies derived from the academic literature and from compliance reports from the Public Utilities Commission of Nevada (PUC).

Our major findings show:

• The current RPS law will raise the cost of electricity by $174 million for the state’s electricity consumers in 2025, within a range of $45 million and $310 million.
• Nevada’s electricity prices will rise by 6 percent by 2025, due to the current RPS law, within a range of 1.6 percent and 10.8 percent.

These increased energy prices will hurt Nevada’s households and businesses and, in turn, inflict significant harm on the state economy. In 2025, the RPS would:

• lower employment by an expected 1,930 jobs, within a range of 590 jobs and 3,070 jobs;
• reduce real disposable income by $233 million, within a range of $72 million and $373 million;
• decrease investment by  $29 million, within a range of $9 million and $47 million; and
• increase the average household electricity bill by $70 per year; commercial businesses by an expected $400 per year; and industrial businesses by an expected $26,220 per year.

Click here to read the full study