Data center Switch files lawsuit against Nevada PUC

Switch has filed a lawsuit against the Public Utilities Commission of Nevada, alleging the agency is retaliating against the data center company for leaving NV Energy and supporting the November ballot’s Question 3, which would have opened the state’s energy market to competition.

The lawsuit comes after the PUC regulatory operations staff filed a petition on March 22 contending that Switch operates as a utility and should be regulated by the commission.

“The advisory petition has no merit and would not have been filed had Switch ‘played ball’ with the PUCN and its relationship with NV Energy,” Switch said in the lawsuit.

Hitting a nerve

Switch left NV Energy in 2017 in search of a provider that would allow it to power its Southern Nevada data center facilities with 100 percent renewables. Since then, other major entities such as Caesars Entertainment and the MSG Sphere Las Vegas have left or started the process of leaving.

Even after it unbundled from NV Energy, Switch continued to advocate for alternative energy options in Nevada through Question 3 — also known as the Energy Choice Initiative — by investing $12.4 million into a pro-Question 3 PAC.

Meanwhile, NV Energy invested more than $62 million into the Coalition to Defeat Question 3 PAC, and the PUC issued a report in April 2018 saying that Question 3, if passed, would increase power bills for most Nevadans for roughly a decade. The campaign supporting the initiative called the report “one-sided” and said it was meant to protect NV Energy’s monopoly.

The PUC said in the initiative’s final report it “removes the authority of the PUCN.” The question was defeated in the November election.

“Switch has — and continues to — hit a nerve within the PUCN,” the company said in the lawsuit, which was filed Monday. The PUCN has a “desire to penalize Switch and to teach Switch a lesson.”

Switch also said in the lawsuit — which names the PUC, its regulatory operations staff and PUC staff counsel Tamara Cordova as defendants — that it has criticized the commission’s operations and its “too-cozy relationship” with NV Energy, which in turn marked it as “hostile” to the commission and its staff.

Spokespeople for Switch, the PUC and NV Energy said they don’t provide comment on pending litigation.

Defining a utility

The commission staff’s petition contended that Switch acts as a public utility because it said the data center company is re-selling electricity at a marked-up price. If Switch is deemed to be operating as a utility, it would be regulated by the PUC much like NV Energy and Southwest Gas Corp. Switch would be subject to investigations and rulemaking and would have to receive approval before any rate changes.

“Switch’s customers are not being protected as intended by the Legislature with respect to the rates they are being charged,” the commission staff said in the petition. “It is the staff’s understanding and belief that Switch is making a profit off of the electricity that it is re-selling its customers.”

Switch argued that it is not a utility because it sells uptime — the amount of time that a server stays up and running — not power, as the PUC staff claims in its filings.

And while the commission staff said Switch provides services to the public at large, Switch said its services aren’t available to general electric power consumers. Instead, it offers business-to-business technology licenses.

“The Nevada Legislature did not give the PUCN the power to regulate data enters,” Switch said in the lawsuit. “The PUCN and its regulatory staff are seeking to act well outside the lane approved by the Nevada Legislature.”

Switch said the petition was full of “false and defamatory statements” made to hurt Switch and its relations with customers and investors.

Contact Bailey Schulz at bschulz@reviewjournal.com or 702-383-0233. Follow @bailey_schulz on Twitter.