State Lawmakers Call For Review Of 20-Year Solar Contract

CARSON CITY – State lawmakers today approved $46,284 from a legislative contingency fund to help the Nevada Office of the Military cover a budget shortfall due to high energy costs resulting from a solar project built at three of its sites around the state.

But lawmakers also asked for an attorney general review of the 20-year deal with Sierra Solar to see if the 15 cent per kilowatt hour charge for the electricity can be modified. The rate is now higher than what the agency could get buying power directly from NV Energy.

The contract was entered into in December of 2010, before Gov. Brian Sandoval began his term.

Photo by Fernando Tomás via Wikimedia Commons.

Jennifer McEntee, administrative services officer for the agency, said the energy costs to the state are higher at the three sites because the facilities receive more state general fund support than other facilities operated by the agency. The budget shortfall is the result of this higher state share of the energy costs, she said.

State Budget Director Jeff Mohlenkamp told lawmakers, meeting as the Interim Finance Committee, that future solar projects will not go forward without a guarantee that they will be at least cost neutral to the state.

“I do think that there is still some really good opportunities for solar, however it really has to be dialed in in order for it to pencil out,” he said.

Keys to successful projects are obtaining both federal tax credits and rebates from NV Energy, Mohlenkamp said.

Lt. Col. Rick Blower said when the contract was approved, electricity rates were expected to rise. Rates have come down instead, however. But it is yet to be determined if the 20-year contract is a bad deal for the state, he said.

Sen. Steven Horsford, D-Las Vegas, asked if there is an opportunity to renegotiate the contract.

Mohlenkamp said any such effort would be difficult, given the investment by the company in the equipment at the three facilities.

Horsford asked that the attorney general’s office review the agreement anyway.

“It’s not that the technology or the approach on renewables is the problem, it’s the fact that someone negotiated a bad deal on behalf of this department,” he said. “We can’t pay for something at a higher rate per kilowatt hour than what we can get in the market from other competing resources.”

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Audio clips:

State Budget Director Jeff Mohlenkamp says the state will be careful moving forward with solar projects to ensure they are at least cost neutral:

042412Mohlenkamp1 :10 normal commercial terms.”

Mohlenkamp says some solar projects are expected to be worth pursuing:

042412Mohlenkamp2 :08 to pencil out.”

Sen. Steven Horsford says the issue is someone negotiated a bad deal:

042412Horsford1 :25 of this department.”

Horsford says an attorney general review of the contract is needed:

042412Horsford2 :09 other competing resources.”