Economic Analysis of Nevada’s Future Electricity-Generating Alternatives

ECONorthwest explores the economic consequences and tradeoffs of two alternative proposals to generate electricity for Nevada.

Sierra Pacific Power Company and Nevada Power Company, the state’s two major electric utilities, estimate that demand for electricity will grow by about 2,000 megawatts (MW) over the next decade. Nevadans soon must choose between two alternatives for accommodating this growth.  One alternative involves generating electricity by burning coal. The utilities’ parent company, Sierra Pacific Resources, seeks to build one 750-MW coal-fired generator near Ely, in White Pine County, by 2011 and another by 2013. Its preliminary estimate of the total cost is $3.2 billion. Two other independent power producers also have proposed building new coal-fired generators in the state, and to sell the output to customers in Nevada and other states. LS Power Group proposes to build a 1,590-MW generator near Ely, and Sithe Global Power, LLC, proposes a 750-MW generator near Toquop, in Lincoln County. In each case, the coal for the generators probably would be shipped in by rail from Wyoming. The other alternative does not involve burning coal. Instead, it entails investing in energy efficiency, so that energy savings could be used to meet new demands, and in new generators powered by wind, geothermal heat, and other renewable resources. The choice between the two alternatives will have important economic consequences for Nevada’s families, landowners, and businesses. This report describes the tradeoffs, focusing on these four areas: environmental consequences, impact on jobs, costs to ratepayers, and economic risks.

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