Add Caesars to list of big companies seeking to drop Nevada Power

CARSON CITY — The list of large companies seeking to leave Nevada Power to secure their own cheaper energy is growing.

At a hearing that got underway Wednesday to determine if the data storage company Switch should be able to leave as a customer of Nevada Power and purchase its own electricity on the wholesale market, it was disclosed that Caesars Entertainment has also indicated an interest in such a move.

The gaming company would make four major casino companies, including Wynn Las Vegas, MGM Resorts International and Las Vegas Sands Corp., expected to file applications with the PUC to exit as retail customers of Nevada Power.

Concerns have been expressed by the Bureau of Consumer Protection, among others, that the exiting companies could mean higher rates for average utility customers.

The Switch hearing in front of Nevada Public Utility Commission Chairwoman Alaina Burtenshaw could last as long as three days. Once it’s completed, Burtenshaw will make a recommendation on the application to the full commission later this year.

Switch has asked to be able to exit from Nevada Power by March 1 or as soon as is practical.

But the company faces an “exit fee” of many millions of dollars for permission to leave as a retail customer of Nevada Power, which is part of NV Energy.

Staff with the Nevada Public Utilities Commission is recommending that Switch pay a $27.7 million “exit fee,” which is meant to protect the utility’s remaining customers from the costs associated with the company’s departure.

Switch says it should have to pay no more than $18.5 million.

Shawn Elicegui, an executive with Nevada Power, said in his testimony that the utility supports the PUC staff recommendation for the higher impact fee.

The fee provides protections to Nevada Power customers, and future growth in power demand might mitigate any additional consequences of Switch’s departure, he said.

But that growth may not materialize anytime soon if the four gaming companies exit as well. They have submitted letters to the PUC announcing their intentions to purchase power from a “qualified energy provider” for their energy needs.

Those companies collectively have a peak demand of about 370 megawatts of electricity, Elicegui said. By contrast, Switch has an average load of 34 megawatts annually.

No applications have been filed by any of the gaming companies yet.

Switch is using a 2001 law approved by the state Legislature allowing companies to leave the retail market. The law was designed to help Nevada Power control its energy costs at a time when explosive growth was pushing energy prices higher.

But now, those pressures don’t exist and there is a concern that the departure of Switch and other large companies could end up costing the average utility customer in higher rates.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801