Everyone smile and say ‘fiduciary responsibility’

Nevada’s resort industry and Nevada’s for-profit electric monopoly are not seeing eye to eye.

Again.

There are a lot of reasons your power bills are higher, including bizarre and relatively brief but nonetheless record-setting spikes in natural gas prices nationally earlier this year. About 2/3 of electricity NV Energy generates is from natural gas.

The local electric monopoly, a subsidiary of Warren Buffet’s sprawling Berkshire Hathaway Energy conglomerate, is also driven to raise rates by the same factor that has been contributing in part to increases in the costs of insurance, gas, groceries, and many other things:

The conglomerate, like all conglomerates, has a sacred fiduciary responsibility to make as much money as it possibly can for shareholders. 

No less dedicated to fulfilling its own fiduciary responsibility is Nevada’s gambling-resort industry, the largest corporations of which have bolted from the NV Energy over the years to buy electricity elsewhere.

State-mandated fees on the corporations as a cost of exiting NV Energy notwithstanding, the exodus has still effectively saddled more of the costs of running a monopoly (and pleasing its shareholders) on the backs of people who pay power bills. Or so NV Energy has suggested to shareholders in prior years.

And so the resort industry is appealing a plan approved by state regulators to make everyone in the state cover some costs incurred predominantly in Northern Nevada. Which is not where most of your resort industry is.

In addition to further shaping what part of your power bill might look like, the latest front in the long-going ongoing kerfuffle between Nevada’s wonderful (according to them) corporate citizens has a small but still noteworthy economic development ripple effect.

Gov. Joe Lombardo – who likes government modernization and efficiency so much he had his office draft a “Government Modernization and Efficiency Act” – has weirdly failed for what is now a prolonged period of time to fill an open seat on the Public Utilities Commission which makes the rulings in the industry-on-industry spatting.  

Confusion and uncertainty (but not, alas, efficiency) has filled the vacuum where Lombardo’s appointment is supposed to be, assuring that some members of at least one sector of the area workforce will benefit from all this: lawyers.

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In other care and feeding of corporate citizenry news, Sens. Jacky Rosen and Catherine Cortez Masto (D-Mining), issued a joint statement last week in which they expressed their joint disappointment with the Biden administration.

Tucked into a new Interior Department report on mining on public lands, you see, is a recommendation that mining corporations should pay federal royalties on minerals that unlike oil, natural gas, or coal, are mined under the auspices of law enacted during the administration of President Ulysses S. Grant.

Minerals to which the 1872 law apply, and which are not subject to any federal mineral royalties, include (but are not limited to) Nevada’s long-time mineral industry darling, gold, and Nevada’s newest mineral darling, which is not as shiny but potentially may produce larger revenue and higher profits, lithium.

The tax recommendation is for a royalty on net value of minerals – the value after corporations are allowed to claim several generous deductions – not gross value.

A federal royalty on net value is a concept Nevada politicians (Cortez Masto, Harry Reid, Dean Heller, Mark Amodei, Steven Horfsord, etc.) and the industry have said they’d be open to considering on multiple occasions over the years. Because it works so great in Nevada, they always say.

But they’ve never meant it. Mining corporations have – you guessed it – a solemn fiduciary responsibility to shareholders. So if it’s all the same to the people of Nevada and the United States, or even if it’s not, the corporations would prefer to continue to paying zero federal mineral royalties of any kind.

The tax recommendation in the report won’t go anywhere. Its primary, perhaps sole, practical use will be to let Rosen boast about killing it while on reelection campaign swings in rural Nevada.

Cortez Masto similarly took credit for killing a federal mining tax proposal a couple years ago. In return she garnered some rural Nevada campaign endorsements last year. Now it’s Rosen’s turn.

The report also recommends regulatory reforms that would make public land managers more responsive and responsible about where they’re rubber-stamping mines and why. Of course we mustn’t have that either, no matter how dysfunctional and chaotic and arbitrary the process has been for green-lighting development of holy sacred lithium amen.

A few months ago someone described the situation like this: “The promise of progress and prosperity, of ‘taming the savage West,’ was invoked by industry and politicians in the 19th century as the rationale for coddling the mining industry. Now the promise is electric vehicles. The valuable mineral might have changed, but the industry’s eagerness to seize the moment for maximum financial advantage and unfettered operational carte blanche remains the same.”

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Alright everyone. Look at the camera. One, two, (click). Perfect.

Portions of this column originally appeared in the Daily Current newsletter, which is free, and which you can subscribe to here.