the economic impact of renewable portfolio standard changes

Introduction & Overview

Project Overview

» Applied Analysis was retained by the Clean Energy Project to review and analyze the economic impacts of various changes to Nevada’s Renewable Portfolio Standard (RPS).

» This presentation provides a summary of our general approach the salient findings of our review and analysis; a more detailed analysis and economic impact assessment model have been prepared and submitted separately.

» Finding are as of the last date of our fieldwork: March 22, 2013.

General Approach

» Four (4) alternative scenarios were provided by the Clean Energy Project, ranging from a continuation of the status quo (Base Case) to those that significantly increase the RPS and the way it is calculated.

» Aspen Environmental Group provided development and operating costs estimates under each alternative scenario; Applied Analysis utilized the Michigan IMPLAN Group’s economic input-output model to estimate the economic impact under each provided scenario.

» Reported impacts are incremental, reflecting additional capital and labor requirements as in comparison to the Base Case; positive and negative impacts were identified, measured and analyzed.

General Approach Alternative Cases Analyzed

Status Quo (Base Case)

An electricity provider must generate, acquire or save electricity from renewable energy or energy efficiency measures in the following percentages: 9% in 2007-08; 12% in 2009-10; 15% in 2011-12; 18% in 2013-14; 20% in 2015-19 22% in 2020-24; and 25% in for 2025 and each calendar year thereafter. Solar of at least 5% for each calendar year up to and including 2015; and 6% for 2016 and each calendar year thereafter.

Alternative #1 (Clean RPS)

Base case scenario, plus the following: 1. Starting in 2014, energy efficiency (demand-side management or “DSM”) is assumed to be excluded in the RPS; 2. Station usage for new renewable resources is not assumed to contribute toward RPS; and 3. Photovoltaic multiplier eliminated for new photovoltaic facilities.

Alternative #2 (Expand RPS)

Starting in 2014, Nevada’s RPS is increased by 2%per year until it reaches 35% total; it is assumed to continue at that rate into perpetuity

Alternative #3 (Clean & Expand RPS) Starting in 2014, Nevada’s RPS is increased by 2%per year until it reaches 35% total; it is assumed to continue at that rate into perpetuity In addition: 1. Starting in 2014, energy efficiency (demand-side management or “DSM”) is assumed to be excluded in the RPS; 2. Station usage for new renewable resources is not assumed to contribute toward RPS; and 3. Photovoltaic multiplier eliminated for new photovoltaic facilities.

Note: Scenarios provided by Clean Energy Project; cost data provided Aspen Environmental Group.

General Approach Economic Impacts Considered

» Economic Factors Measured – Jobs (Employment) – Labor Income (Wages and Salaries) – Output (General Business Activity)

» Study Period: 2014 – 2040 (inclusive)

» Elements Considered in Impact Assessment

– One-time Construction Impacts – Recurring Operating Impacts – Consumer Rate Impacts – Fuel Purchase Impacts

» Types of Economic Impacts Modeled – Direct impacts measure the effects of the specific force being considered (direct spending from the power plants);

compensation for jobs within the new plants and construction projects are also considered direct impacts. – Indirect impacts measure how businesses respond to the impacting condition (secondary impacts); an example would be

one of the new plant’s vendors may hire new employees based on incremental business/spending sourced to the plant. – Induced impacts reflect the effects of increased consumer expenditure due to the change in wage, salary, and personal

income conditions; An employee of one of the new plants going out and spending money in another segment of the economy (e.g., at grocery stores or in movie theaters) is an example of induced impacts. Similarly, when power rates are increased and consumer spending in other segments of the economy drops, that is also an example of induced impacts.

– Total impacts reflect the sum of direct, indirect and induced impacts.

Induced OutputIndirect OutputNet Direct Construction Output

Source: 2009 NV Energy IRP, IMPLAN, Aspen Environmental Group, Calculations

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Rate Increase Impact

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General Approach Impact Summary Illustration

Important Limitations to this Analysis » Economic Uncertainty. This analysis is designed to evaluate the economic impacts of

alternative investment and spending patterns within Nevada energy sector. The sector can be impacted by any number of external factors including, without limitation, global economic forces, advancements in technology and regulatory changes.

» Limitations of Underlying Data. This analysis relies on capital and operating data provided by Aspen Environmental Group and expenditure data reported by NV Energy and other third parties. While we have no reason to doubt the accuracy of these data, we have not undertaken an audit or other assurance procedures relative to the data, and therefore, we cannot attest to its completeness or utility for all purposes.

» Need for Additional Research. While we believe the conclusions of this analysis are both clear and meaningful, we recognize the need for additional refinement of the underlying assumptions to this analysis and a narrowing of the permutations in terms of possible outcomes. This will lead to more accurate impact estimates.

Findings in Summary

Findings in Summary » Net Positive Economic Impact. Although positive and negative impacts are attributable to

a proposed increase to Nevada’s RPS, the net overall economic impacts of the cases reviewed herein are positive. Positive impacts are reflected in higher rates of employment, wage and salary payments and economic output.

» One-Time Construction Impacts Significant. Net new facility construction is estimated to range from $3.0 billion to $6.4 billion depending on the RPS scenario analyzed. Including indirect impacts, the implications of this level of investment translate into between $5.2 billion and $11.0 billion in increased economic activity throughout the state of Nevada. It also translates into between 37,300 and 78,400 person-years of employment (i.e., one person employed for one year). These employees would earn between $2.1 billion and $4.4 billion in wages and salaries throughout the study period.

» Recurring Operations Impacts Modest. Incremental operations and maintenance of the alternative renewable facilities would generate between 127 and 250 net new jobs annually, increasing labor income by between $10.2 million and $20.2 million and output by between $41.8 million and $82.3 million each year.

Findings in Summary Impact Summary Matrix

Construction Impacts1

Operations Impacts2

Rate Impacts2

Avoided Fuel Costs3

Net Impacts1

Alternative #1 (Clean RPS)

Incremental investment: $3.0 billion. Resulting impact: +37,262 jobs, +$2.1 billion in labor income; and +$5.2 billion in economic

output

Incremental spending: $33.4 million. Resulting

impact: +127 jobs, +$10.2 million in labor income;

+$786 million in economic output

Rate increase $12.8 million to $131.7 million. Resulting impact: -95 to -980 jobs; -$4.0 million to -$41.6 million in labor income; -$11.8 million to -$121.5 million

in economic output

Annual Fuel Costs $175.2

million; combined, all

years: $3.8 billion

Jobs: +20,878 to +37,777; labor

income: +$1.5 billion to +$2.2 billion;

economic output:+$3.7 billion to +$5.8 billion

Alternative #2 (Expand RPS)


output



+$47.5 million in economic output

Rate increase $14.1 million to $144.9 million. Resulting impact: -105 to -1,079 jobs; -$4.4 million to -$45.8 million in labor income; $13.0 million to -$133.6 million

in economic output



years: $4.2 billion

Jobs: +24,212 to +42,151; labor



Alternative #3 (Clean & Expand RPS)


output



+$82.3mbillion in economic output

Rate impact $24.1 million to $248.3 million. Resulting impact: -180 to -1,848; -$7.6 million to -$78.4 million in labor income;

-$22.2 million to -$229.0 million in economic output



years: $7.2 billion

Jobs: +45,256 to +79,934; labor



1Values expressed as total impact through 2040; employment expressed in person-years. 2Values expressed as annual impacts after all new plants built through 2040.

3A portion of overall Rate Impacts and not included individually in Net Impact calculation; assumes $5 per mmBTU natural gas price.

Findings in Summary » Rate Increase Impact Significant and Uncertain. Nevada consumers will bear higher

energy costs under all scenarios analyzed, negatively impacting employment, incomes and economic output. Rate impacts on Nevada consumers are highly influenced by assumption regarding fuel costs, carbon taxes and electricity sales. Under assumptions most favorable to the status quo (e.g., low cost of fossil fuels and no carbon taxes) more jobs are lost due to decreased spending by consumers as they bear higher relative energy costs. Increased electricity cost to consumers are as high as $5.2 billion throughout the study period, resulting in an annual loss of as many as 1,848 jobs and $78.4 million in labor income.

» Avoided Fossil Fuel Cost Key. An estimated $175,180 in fossil fuels as assumed to be avoided annually for each megawatt of renewable power built in the analyzed scenarios. Fuel required by these plants is acquired from outside Nevada, resulting in minimal in-state impacts in terms of jobs, wages and output. Avoiding these cost allows the Nevada to effectively lower the cost of deploying additional renewable energy alternative. It is this trade off that shifts what would be a negative economic impact to a positive economic impact.

Findings in Summary » Environmental, Health, Economic Development and Other Impacts Not Included. With

the exception of those rate impact models that include carbon tax assumptions, the analyses reflected here do not attempt to quantify the environmental, public health and social impacts associated with the alternative RPS strategies. Additionally, this analysis does not attempt to quantify or analyze the economic development and/or economic diversification impacts associated with an increased level of investment in renewable technologies. While beyond the scope of this analysis, these impacts are likely to be material and warrant additional study.

Detailed Scenario Analysis Alternative #1 | Clean RPS

Alternative Scenario Profile Alternative #1 | Clean RPS

General Assumptions: Base case scenario, plus the following: 1. Starting in 2014, energy efficiency (demand-side management or “DSM”) is assumed to be excluded in the RPS; 2. Station usage for new renewable resources is not assumed to contribute toward RPS; and 3. Photovoltaic multiplier eliminated for new photovoltaic facilities.

Beginning Ending Study Period: 2014 2040

Incremental Capacity/Investment: Capacity (MW) Cost ($ in millions) Solar PV1 200 $326.70 Solar CSP2 200 $1,060.50 Geothermal 300 $1,563.10 Wind 300 $553.50 Transmission $246.40 Total 1,000 $3,750.20

Avoided Out-of-State Fuel Purchases3: $175.2 Million Annually Source: Aspen Environmental Group (2013) and calculations. 1PV: Photovoltaic. 2CSV: Concentrated solar power 3Assumes $5 per mmBTU Natural Gas Cost

Scenario Impact Assessment Summary Alternative #1 | Clean RPS

($ in millions)

Economic Impact Direct Indirect Induced Total

One-Time Construction Impacts (Cumulative) Person Years of Employment 18,960 7,173 11,129 37,262 Labor Income $1,254.6 $374.1 $443.5 $2,072.2 Output $3,021.7 $904.5 $1,322.0 $5,248.2

Recurring Operations Impacts (Cumulative) Person Years of Employment 1,072 251 1,010 2,334 Labor Income $135.2 $12.9 $40.3 $188.3 Output $613.6 $34.4 $120.1 $768.1

Rate Impacts1 (Cumulative) Person Years of Employment 0 0 -10,113 -10,113 Labor Income $0.0 $0.0 -$429.1 -$429.1 Output $0.0 $0.0 -$1,252.7 -$1,252.7

Net Economic Impact (Cumulative) Person Years of Employment 20,032 7,425 2,026 29,483 Labor Income $1,389.7 $387.0 $54.8 $1,831.5 Output $3,635.4 $938.8 $189.4 $4,763.6

Net Economic Impact (Annual) Jobs 742 275 75 1,092 Labor Income $51.5 $14.3 $2.0 $67.8 Output $134.6 $34.8 $7.0 $176.4

1Rate impacts vary materially depending on assumptions specific to the presence of carbon taxes, fossil fuel costs, and out-of-state sales. For ease of summary, a mid-case scenario is provided. A summary of all rate impact analysis for all scenarios is provided at the end of this section.

Detailed Scenario Analysis Alternative #2 | Expand RPS

Alternative Scenario Profile Alternative #2 | Expand RPS

General Assumptions: Starting in 2014, Nevada’s RPS is increased by 2% per year until it reaches 35% total; it is assumed to continue at that rate into perpetuity


Incremental Capacity/Investment: Capacity (MW) Cost ($ in millions) Solar PV1 200 $ 319.0 Solar CSP2 250 $ 1,313.3 Geothermal 325 $ 1,693.6 Wind 325 $ 586.0 Transmission $ 246.4 Total 1,100 $ 4,158.3

Avoided Out-of-State Fuel Purchases3: $192.7 Million Annually Source: Aspen Environmental Group (2013). 1PV: Photovoltaic. 2CSV: Concentrated solar power 3Assumes $5 per mmBTU Natural Gas Cost

Scenario Impact Assessment Summary Alternative #2 | Expand RPS

($ in millions)


One-Time Construction Impacts (Cumulative) Person Years of Employment 21,126 7,993 12,400 41,518 Labor Income $1,397.9 $416.9 $494.2 $2,309.0 Output $3,366.9 $1,007.8 $1,473.1 $5,847.8

Recurring Operations Impacts (Cumulative) Person Years of Employment 1,177 276 1,109 2,563 Labor Income $148.4 $14.2 $44.2 $206.8 Output $673.8 $37.7 $131.9 $843.3


Net Economic Impact (Cumulative) Person Years of Employment 22,303 8,269 2,774 33,346 Labor Income $1,546.3 $431.1 $83.0 $2,060.3 Output $4,040.7 $1,045.5 $275.1 $5,361.3

Net Economic Impact (Annual) Jobs 826 306 103 1,235 Labor Income $57.3 $16.0 $3.1 $76.3 Output $149.7 $38.7 $10.2 $198.6


Detailed Scenario Analysis Alternative #3 | Clean & Expand RPS

Alternative Scenario Profile Alternative #3 | Clean & Expand RPS

General Assumptions: Starting in 2014, Nevada’s RPS is increased by 2%per year until it reaches 35% total; it is assumed to continue at that rate into perpetuity. In addition: 1. Starting in 2014, energy efficiency (demand-side management or “DSM”) is assumed to be excluded in the RPS; 2. Station usage for new renewable resources is not assumed to contribute toward RPS; and 3. Photovoltaic multiplier eliminated for new photovoltaic facilities.


Incremental Capacity/Investment: Capacity (MW) Cost ($ in millions) Solar PV1 360 $ 602.1 Solar CSP2 400 $ 2,223.0 Geothermal 600 $ 3,197.3 Wind 525 $ 981.0 Transmission $ 724.9 Total 1,885 $ 7,728.3

Avoided Out-of-State Fuel Purchases3: $330.2 Million Annually Source: Aspen Environmental Group (2013). 1PV: Photovoltaic. 2CSV: Concentrated solar power 3Assumes $5 per mmBTU Natural Gas Cost

Scenario Impact Assessment Summary Alternative #3 | Clean & Expand RPS

($ in millions)


One-Time Construction Impacts (Cumulative) Person Years of Employment 39,875 15,087 23,405 78,366 Labor Income $2,638.5 $786.9 $932.8 $4,358.2 Output $6,355.1 $1,902.2 $2,780.4 $11,037.7

Recurring Operations Impacts (Cumulative) Person Years of Employment 2,435 570 2,294 5,300 Labor Income $306.9 $29.3 $91.5 $427.7 Output $1,393.5 $78.0 $272.7 $1,744.2


Net Economic Impact (Cumulative) Person Years of Employment 42,310 15,657 4,947 62,914 Labor Income $2,945.4 $816.2 $143.8 $3,905.4 Output $7,748.6 $1,980.3 $482.4 $10,211.2

h

Net Economic Impact (Annual) Jobs 1,567 580 183 2,330 Labor Income $109.1 $30.2 $5.3 $144.6 Output $287.0 $73.3 $17.9 $378.2


Rate Impact Assessment Impact Assessment Matrices

Rate Impact Assessment » The potential impact of rate increases is affected by a number of external factors

including, without limitation: – The cost of fossil fuels; – Sales to other states; and – Carbon taxes.

» High fuel costs and/or carbon taxes would lead to increased impact from the

alternative renewable scenarios consider in this analysis, as maintaining the status quo (Base Case) would become more expensive relative to the renewable options

» Allowing renewable sales to other states helps to damper rate increases with a few notable exceptions

» The challenge from an analytical standpoint is that this makes the impact assessment three dimensional. For each of the three scenarios analyzed, there are 17 rate scenario combinations. They are summarized on the following page.

Summary of Expected Power Rate Increases ($ in millions through 2040)

CASE: Scenario 1 Scenario 2 Scenario 3 Low Fuel-No Sales-No Carbon Tax (Low) -$2,514.9 -$2,669.7 -$5,161.0 Low Fuel-Sales-No Carbon Tax -$2,466.3 -$2,618.0 -$5,061.1 Low Fuel-No Sales-Mid Carbon Tax -$2,057.0 -$2,183.6 -$4,221.2 Base Fuel-No Sales-Mid Carbon Tax -$1,528.1 -$1,622.1 -$3,135.7 Base Fuel-Sales-No Carbon Tax -$1,500.2 -$1,592.5 -$3,078.6 Base Fuel-No Sales-Low Carbon Tax -$1,368.2 -$1,452.4 -$2,807.8 Base Fuel-Sales-Low Carbon Tax (Medium) -$1,358.8 -$1,442.4 -$2,788.4 Base Fuel-Sales-Mid Carbon Tax -$1,149.0 -$1,219.7 -$2,357.8 High Fuel-No Sales-No Carbon Tax -$579.8 -$615.4 -$1,189.7 High Fuel-Sales-No Carbon Tax -$557.2 -$591.5 -$1,143.4 Base Fuel-Sales-High Carbon Tax -$480.6 -$510.2 -$986.3 Base Fuel-No Sales-High Carbon Tax -$402.4 -$427.2 -$825.9 High Fuel-Sales-Mid Carbon Tax -$266.6 -$283.0 -$547.0 High Fuel-No Sales-Mid Carbon Tax (High) -$244.3 -$259.4 -$501.4

Source: 2009 & 2012 NV Energy IRP, IMPLAN, Aspen Environmental Group, Calculations

Summary of Rate Increase Employment Impact (in job-years through 2040)

CASE: Scenario 1 Scenario 2 Scenario 3 Low Fuel-No Sales-No Carbon Tax (Low) -18,717 -19,869 -38,410 Low Fuel-Sales-No Carbon Tax -18,355 -19,484 -37,667 Low Fuel-No Sales-Mid Carbon Tax -15,309 -16,251 -31,416 Base Fuel-No Sales-Mid Carbon Tax -11,372 -12,072 -23,337 Base Fuel-Sales-No Carbon Tax -11,372 -12,072 -23,337 Base Fuel-No Sales-Low Carbon Tax -11,165 -11,852 -22,912 Base Fuel-Sales-Low Carbon Tax (Medium) -10,183 -10,810 -20,897 Base Fuel-Sales-Mid Carbon Tax -10,113 -10,735 -20,752 High Fuel-No Sales-No Carbon Tax -8,551 -9,077 -17,548 High Fuel-Sales-No Carbon Tax -4,315 -4,580 -8,854 Base Fuel-Sales-High Carbon Tax -4,147 -4,402 -8,509 Base Fuel-No Sales-High Carbon Tax -3,577 -3,797 -7,341 High Fuel-Sales-Mid Carbon Tax -2,995 -3,179 -6,146 High Fuel-No Sales-Mid Carbon Tax (High) -1,984 -2,106 -4,071


Summary of Rate Increase Labor Income Impact ($ in millions through 2040)

CASE: Scenario 1 Scenario 2 Scenario 3 Low Fuel-No Sales-No Carbon Tax (Low) -$794.1 -$843.0 -$1,629.7 Low Fuel-Sales-No Carbon Tax -$778.8 -$826.7 -$1,598.1 Low Fuel-No Sales-Mid Carbon Tax -$649.5 -$689.5 -$1,332.9 Base Fuel-No Sales-Mid Carbon Tax -$482.5 -$512.2 -$990.2 Base Fuel-Sales-No Carbon Tax -$482.5 -$512.2 -$990.2 Base Fuel-No Sales-Low Carbon Tax -$473.7 -$502.9 -$972.1 Base Fuel-Sales-Low Carbon Tax (Medium) -$432.0 -$458.6 -$886.6 Base Fuel-Sales-Mid Carbon Tax -$429.1 -$455.5 -$880.5 High Fuel-No Sales-No Carbon Tax -$362.8 -$385.1 -$744.5 High Fuel-Sales-No Carbon Tax -$183.1 -$194.3 -$375.7 Base Fuel-Sales-High Carbon Tax -$175.9 -$186.8 -$361.0 Base Fuel-No Sales-High Carbon Tax -$151.8 -$161.1 -$311.5 High Fuel-Sales-Mid Carbon Tax -$127.1 -$134.9 -$260.8 High Fuel-No Sales-Mid Carbon Tax (High) -$84.2 -$89.4 -$172.7


Summary of Rate Increase Output Impact ($ in millions through 2040)

CASE: Scenario 1 Scenario 2 Scenario 3 Low Fuel-No Sales-No Carbon Tax (Low) -$2,318.7 -$2,461.4 -$4,758.2 Low Fuel-Sales-No Carbon Tax -$2,273.8 -$2,413.7 -$4,666.1 Low Fuel-No Sales-Mid Carbon Tax -$1,896.5 -$2,013.2 -$3,891.8 Base Fuel-No Sales-Mid Carbon Tax -$1,408.8 -$1,495.5 -$2,891.0 Base Fuel-Sales-No Carbon Tax -$1,408.8 -$1,495.5 -$2,891.0 Base Fuel-No Sales-Low Carbon Tax -$1,383.1 -$1,468.3 -$2,838.4 Base Fuel-Sales-Low Carbon Tax (Medium) -$1,261.5 -$1,339.1 -$2,588.7 Base Fuel-Sales-Mid Carbon Tax -$1,252.7 -$1,329.8 -$2,570.8 High Fuel-No Sales-No Carbon Tax -$1,059.3 -$1,124.5 -$2,173.8 High Fuel-Sales-No Carbon Tax -$534.5 -$567.4 -$1,096.9 Base Fuel-Sales-High Carbon Tax -$513.7 -$545.3 -$1,054.1 Base Fuel-No Sales-High Carbon Tax -$443.1 -$470.4 -$909.4 High Fuel-Sales-Mid Carbon Tax -$371.0 -$393.9 -$761.4 High Fuel-No Sales-Mid Carbon Tax (High) -$245.8 -$260.9 -$504.3


Combined Impact Assessment Impact Assessment Inclusive of Rate Impact Assessment Matrix

Summary of Total Output Impacts ($ in millions through 2040)

CASE: Scenario 1 Scenario 2 Scenario 3 Low Fuel-No Sales-No Carbon Tax (Low) $3,697.7 $4,229.8 $8,023.7 Low Fuel-Sales-No Carbon Tax $3,742.5 $4,277.4 $8,115.8 Low Fuel-No Sales-Mid Carbon Tax $4,119.9 $4,678.0 $8,890.2 Base Fuel-No Sales-Mid Carbon Tax $4,607.5 $5,195.7 $9,890.9 Base Fuel-Sales-No Carbon Tax $4,633.2 $5,222.9 $9,943.6 Base Fuel-No Sales-Low Carbon Tax $4,754.9 $5,352.1 $10,193.3 Base Fuel-Sales-Low Carbon Tax (Medium) $4,763.6 $5,361.3 $10,211.2 Base Fuel-Sales-Mid Carbon Tax $4,957.0 $5,566.7 $10,608.2 High Fuel-No Sales-No Carbon Tax $5,481.8 $6,123.7 $11,685.1 High Fuel-Sales-No Carbon Tax $5,502.6 $6,145.9 $11,727.8 Base Fuel-Sales-High Carbon Tax $5,573.2 $6,220.8 $11,872.6 Base Fuel-No Sales-High Carbon Tax $5,645.3 $6,297.3 $12,020.5 High Fuel-Sales-Mid Carbon Tax $5,770.6 $6,430.3 $12,277.6 High Fuel-No Sales-Mid Carbon Tax (High) $5,791.1 $6,452.0 $12,319.7


Summary of Total Labor Income Impacts ($ in millions through 2040)

CASE: Scenario 1 Scenario 2 Scenario 3 Low Fuel-No Sales-No Carbon Tax (Low) $1,466.4 $1,672.8 $3,156.2 Low Fuel-Sales-No Carbon Tax $1,481.8 $1,689.1 $3,187.8 Low Fuel-No Sales-Mid Carbon Tax $1,611.1 $1,826.3 $3,453.0 Base Fuel-No Sales-Mid Carbon Tax $1,778.1 $2,003.6 $3,795.7 Base Fuel-Sales-No Carbon Tax $1,786.9 $2,012.9 $3,813.8 Base Fuel-No Sales-Low Carbon Tax $1,828.5 $2,057.1 $3,899.3 Base Fuel-Sales-Low Carbon Tax (Medium) $1,831.5 $2,060.3 $3,905.4 Base Fuel-Sales-Mid Carbon Tax $1,897.8 $2,130.6 $4,041.4 High Fuel-No Sales-No Carbon Tax $2,077.5 $2,321.4 $4,410.2 High Fuel-Sales-No Carbon Tax $2,084.7 $2,329.0 $4,424.9 Base Fuel-Sales-High Carbon Tax $2,108.8 $2,354.7 $4,474.4 Base Fuel-No Sales-High Carbon Tax $2,133.5 $2,380.9 $4,525.1 High Fuel-Sales-Mid Carbon Tax $2,176.4 $2,426.4 $4,613.2 High Fuel-No Sales-Mid Carbon Tax (High) $2,183.4 $2,433.9 $4,627.6


Summary of Total Employment Impacts (job-years through 2040)

CASE: Scenario 1 Scenario 2 Scenario 3 Low Fuel-No Sales-No Carbon Tax (Low) 20,878 24,212 45,256 Low Fuel-Sales-No Carbon Tax 21,241 24,597 46,000 Low Fuel-No Sales-Mid Carbon Tax 24,287 27,830 52,250 Base Fuel-No Sales-Mid Carbon Tax 28,223 32,009 60,329 Base Fuel-Sales-No Carbon Tax 28,430 32,229 60,754 Base Fuel-No Sales-Low Carbon Tax 29,413 33,271 62,769 Base Fuel-Sales-Low Carbon Tax (Medium) 29,483 33,346 62,914 Base Fuel-Sales-Mid Carbon Tax 31,045 35,004 66,118 High Fuel-No Sales-No Carbon Tax 35,281 39,501 74,812 High Fuel-Sales-No Carbon Tax 35,449 39,679 75,157 Base Fuel-Sales-High Carbon Tax 36,019 40,284 76,326 Base Fuel-No Sales-High Carbon Tax 36,600 40,902 77,520 High Fuel-Sales-Mid Carbon Tax 37,612 41,975 79,595 High Fuel-No Sales-Mid Carbon Tax (High) 37,777 42,151 79,934


Analysis Assumptions

Analysis Assumptions Energy Facility Assumptions

» Cases are based on Nevada Energy’s 2009 Integrated Resource Plan, in which the three combined cycle plants replace 1,403 MW of renewable energy in alternate options

» The base case scenario assumes the following power plants to replace 1,403 MW of renewable energy: – 525 MW Combined Cycle Plant in 2017 – Two 558 MW Combined Cycle Plants in 2018 and 2022

» In the renewable alternative, a different fossil fuel plant must still be constructed to meet

demand when renewables are unable to do so: – 576 MW 8-7EA Combustion Turbine Plant

» A scalar is needed to replace varying levels of renewable energy in some

scenarios

Source: Calculation based on data reported by NV Energy and Aspen Environmental Group

Analysis Assumptions Summary of Fossil Fuel Construction Costs

($ in millions)

Base Scenario Lost Construction Costs Combined Cycle 525 MW in 2017 -$604.3 Combined Cycle 558 MW in 2018 -$642.3 Combined Cycle 558 MW in 2022 - $642.3 Total Base Scenario Lost Construction -$1,888.9

Source: 2009 NV Energy IRP, Aspen Environmental Group, Calculations

Renewable Scenarios Construction Costs Combustion Turbine 8-7EA 576 MW in 2017 $640.0 Total Renewable Fossil Fuel Construction $640.0

Net Base Scenario Lost Construction Costs

Net Base Scenario Lost Construction Costs -$1,248.9* *This figure is scaled by a multiplier for each scenario

Base Scenario O&M Costs Combined Cycle 525 MW in 2017 -$10.7 Combined Cycle 558 MW in 2018 -$11.4 Combined Cycle 558 MW in 2022 -$11.4 Total Base Scenario Lost O&M -$33.4

Source: 2009 & 2012 NV Energy IRP, Aspen Environmental Group, Calculations

Renewable Scenarios O&M Costs Combustion Turbine 8-7EA 576 MW in 2017 $7.0 Total Renewable Fossil Fuel O&M $7.0

Net Base Scenario Lost O&M Costs

Net Base Scenario Lost O&M Costs -$26.4* *This figure is scaled by a multiplier for each scenario

Analysis Assumptions Summary of Annual Fossil Fuel O&M Costs

($ in millions, totals after 2022)

Analysis Assumptions Ratio Assumptions

General Formula:

– Alternative #1: 1000 MW÷1403 MW = 0.713



Source: 2009 NV Energy Integrated Resource Plan (Cases 3 and 5 in Report), calculations

Scenario MW (Alternative Scenario 1, 2, or 3) Nevada Energy Plan MW (1403 MW of Renewables)

Analysis Assumptions Incremental Capacity and Investment Matrix

($ in millions)

Alternative #1 Alternative #2 Alternative #3 (Clean RPS) (Expand RPS) (Clean & Expand RPS)

Capacity Cost Capacity Cost Capacity Cost

Solar PV1 200 $326.7 200 $319.0 360 $602.1 Solar CSP2 200 $1,060.5 250 $1,313.3 400 $2,223.0 Geothermal 300 $1,563.1 325 $1,693.6 600 $3,197.3 Wind 300 $553.5 325 $586.0 525 $981.0 Transmission $246.4 $246.4 $724.9 Total 1,000 $3,750.2 1,100 $ 4,158.3 1,885 $ 7,728.3 Source: Aspen Environmental Group (2013). 1PV: Photovoltaic. 2CSV: Concentrated solar power

Analysis Assumptions Impact of Out-of-State Fuel Purchases

» One of the largest costs for traditional power plants are fuel purchases from out-of state vendors

» Fuel imports remove dollars from the Nevada economy – Renewables redirect what would have been fuel costs towards capital costs – The capital costs of renewables have some impact that remains in-state, whereas the costs of fuel do not

» A 576 MW combined cycle plant (the type of plant not built with renewables in Base Scenario), is

expected to produce 2.688 million MW-hours of electricity in a year

» A plant of this size is estimated to consume 18.8 trillion BTUs of natural gas in production

» At $5 per million BTU, the plant will spend an estimated $93.8 million on fuel each year; roughly 3 additional plants of this size will be needed in the base scenario when compared to an additional 1,403 MW of renewable capacity.

Source: Calculation based on data reported by NV Energy and Aspen Environmental Group

the economic impact of renewable portfolio standard changes

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