The Public Utilities Commission of Nevada on Wednesday approved MSG Sphere’s request to leave NV Energy and use an alternative power provider — with no exit fee.
The 400,000-square-foot Sphere project is a partnership with Madison Square Garden and Las Vegas Sands Corp. The performance and special events center, scheduled to open behind The Venetian and Palazzo in 2021, will have a 360-foot-tall dome with an LED exterior light display and a revolutionary sound system.
Las Vegas Sands Corp. considered leaving NV Energy in 2016. Las Vegas Sands decided to stay with the utility after the PUC said the company would have to pay a $23.9 million exit fee. The commission and NV Energy seek exit fees because they contend that departures from the monopoly place increased costs on remaining customers.
Because MSG Sphere gave notice to NV Energy that it did not plan to become a bundled customer in August — before it was included in any of the utility’s planning or load forecasting — it will not have to pay an exit fee.
The commission said in PUC filings that NV Energy will not be “burdened by the increased costs” and Sphere’s departure won’t increase remaining ratepayers’ electric service costs.
The Madison Square Garden Company told the Review-Journal, “We are pleased with the commission’s decision and are excited to be building this first-of-its-kind entertainment venue in Las Vegas.”
MSG Sphere said in PUC filings that it has “no intention of taking service directly from generation assets that are owned by or contractually committed to NV Energy.” At last month’s PUC hearing, the company said it would negotiate a potential energy purchasing agreement with Texas-based Tenaska Power Services Co.
MSG joins a growing list of companies that have left or are trying to leave NV Energy to obtain cheaper power or choose different energy sources, such as solar power.
Six companies have officially exited the utility, starting with Barrick Gold Corp. in 2005.
NV Energy spent $63 million last year to defeat ballot Question 3 and preserve its monopoly. Las Vegas Sands Corp. donated more than $20 million to the campaign to pass Question 3 and create a competitive, open electricity market.
Since voters rejected Question 3 in November’s election, NV Energy has announced plans for $100 million in rate cuts. Also, NV Energy is hoping to roll out a new rate option for government entities and large, commercial customers that’s both cheaper and solar-based, according to documents filed with the PUC.
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.
What will the sphere look like?
The Las Vegas Sphere is a 400,000-square foot project from Madison Square Garden and Las Vegas Sands Corp, and broke ground in September.
The sphere can house more than 18,000 people, and includes a 160,000-square-foot display wrapping around the interior. The 360-foot-tall dome will also have a fully-programmable LED exterior.
The facility’s development and construction phase is expected employ 1,605 people in Clark County, according to documents filed with the Nevada Public Utilities Commission. The estimated annual economic output from the project to reach more than $729 million, according to filings.