Henderson is set to enter an agreement with NV Energy that could save the municipality $250,000 a year.
On Tuesday, the Henderson City Council voted in favor of a five-year agreement to continue receiving fully bundled energy services from the utility.
The contract took effect immediately and prohibits the city from leaving the utility.
According to an agenda item from the City Council meeting, NV Energy will provide an annual $250,000 incentive payment to the city in 2019, 2020 and 2021.
The utility’s actions the following two years would depend on whether the Public Utilities Commission of Nevada approves NV Energy’s optional pricing program tariff, a pending, cheaper rate option for government entities and large, commercial customers. The program would charge a fixed rate based on costs from renewable resources — including six solar projects — instead of a variable energy rate.
NV Energy had withdrawn its application to start with the program last week but plans to refile the application with the PUC “in the near future,” according to spokeswoman Jennifer Schuricht.
“We understand we still have some work to do with various stakeholders to reach a balanced outcome on this program,” Schuricht said in a statement via email.
If the PUC approves the rate after it’s filed again, NV Energy will deliver energy from the program to the city starting in 2022 in place of the monetary incentive. If the rate doesn’t pass, NV Energy will pay the city $250,000 in 2022 and 2023.
According to the agenda, Henderson would save $250,000 or more annually through the optional pricing program tariff. If the city failed to save that much under the pending rate, NV Energy would pay the difference.
In turn, the deal has the city agreeing not to file an application to use an alternative energy provider over the next five years.
The agreement is “a core benefit of competition,” said Kevin O’Donnell, president of North Carolina-based Nova Energy Consultants.
Six companies have departed NV Energy since 2005 to pursue more renewable options and cheaper rates. But a growing list of companies has announced long-term partnerships with the utility in recent months, including Resorts World Las Vegas , The Cosmopolitan of Las Vegas and the Las Vegas Convention and Visitors Authority.
Schuricht declined to say whether the confidential agreements with other companies followed a structure similar to its agreement with Henderson, which is so far the sole agreement subject to public record laws.
“These agreements were reached through individual discussions with our customers in order to provide energy products and services that meet their specific energy and business needs,” she said via email. “NV Energy has always treated customer information as private and will continue to do so in the case of customer agreements.”
Schuricht also said the costs associated with customer agreements are not included in electric rates, and “retaining our commercial and industrial customers benefits all other customers.”
Henderson Mayor Debra March said NV Energy is willing to help the city cut costs through energy efficiency, and will help the city meet renewable energy objectives. She said the utility also pledged to continue to advance West Henderson’s economic development by expanding and building new electric infrastructure.
According to the agenda, West Henderson is set to add both retail and industrial commercial development and grow by approximately 70,000 people by 2050. That population size and growth could, in part, explain why NV Energy fought to keep the city as its customer.
“I assume they are a significant customer in (Southern) Nevada given energy, lighting and building energy needs,” said Rose McKinney-James, a former PUC commissioner.
Officials from another Southern Nevada municipality — Las Vegas — said they were looking into energy deals with both NV Energy and alternative provider Tenaska Power Services Co. back in March.
NV Energy has agreed to “continue pursuing solutions in West Henderson,” according to the agreement, and is set to build out the capacity of its Keehn substation and install a conduit system to help meet rising demand.
Doug Cannon, NV Energy president and CEO, said the company looks forward to assisting Henderson in its “fantastic growth.”