After years of watching some of its largest customers drop off one by one, NV Energy is fighting back.
Twenty Nevada entities have taken steps to leave the utility for another energy provider since 2005, with various entities searching for lower costs and more renewable resources.
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 Public Utilities Commission. But some companies remain uninterested and worry that the deal isn’t as green as alternatives.
A ‘competitive’ option
Six companies have officially exited NV Energy since 2005. In 2018, 10 companies began making moves to leave the utility. So far this year, three entities — energy company Air Liquide Hydrogen Energy, the Las Vegas Convention and Visitors Authority and The Cosmopolitan of Las Vegas — have formally submitted documents to begin the process of departing.
NV Energy’s proposed program, NV Energy Optional Pricing Program Rate, is “intended to stem the tide of departures,” said Rose McKinney-James, a former PUC commissioner.
The program would charge a fixed rate — replacing the current variable energy rate — that’s based on costs from renewable resources, which includes power from six solar projects that were approved in 2018.
The PUC is slated to hold a hearing June 4, after which it will determine whether to allow the program. The open period for enrollment began March 25, prior to its approval date with the PUC.
NV Energy’s goal is to provide a rate that “is competitive with market options available to such customers,” it said in PUC filings.
A statement from NV Energy said it has already heard customers express interest in this type of program. For example, the city of Las Vegas has expressed interest, and Las Vegas Convention and Visitors Authority President and CEO Steve Hill has been tasked to look into negotiations with the utility.
Renewable energy is “important to us. It’s important to the community, and it’s important to our customers,” Hill told the Review-Journal.
But not all companies are interested in the new energy option.
MGM Resorts International said in a statement to the Review-Journal that it has not conducted a review of the new rate, and doesn’t consider it applicable to its major facilities.
Adam Kramer, executive vice president of strategy for Switch, said an analysis showed the new program’s cost would be “substantially higher” for the data center company, which left NV Energy in 2017.
At a PUC meeting on March 7, Shawn Elicegui, senior vice president of regulation and business planning for NV Energy, said “there is no impact or harm to non-participating customers.” NV Energy spokeswoman Jennifer Schuricht told the Review-Journal the program would not raise residential rates.
PUC Commissioner Ann Pongrancz said the commission will issue a procedural order with more questions regarding the impact on ratepayers.
“We are very interested in hearing from the company,” she said, adding that she wants to learn more about whether residential customers rates would change under this new program.
Kramer said Switch isn’t interested in the deal because it doesn’t include renewable energy credits that would allow customers to say they are 100 percent green.
“It’s not a green deal,” he said. “For Switch and other companies, they want renewable energy credits on behalf of the company, not on behalf of the utility.”
At the March 7 meeting, Pongrancz suggested NV Energy change the program’s original name from the NV GreenEnergy Rider 2.0, since the green component of the offering is optional.
‘Dollars and cents approach’
John Restrepo, principal of Las Vegas-based RCG Economics, expects eligible customers to take a “dollars and cents approach” to see if the new program compares to the cost of alternative providers.
According to PUC filings, the new program targets customers who are able to leave through NRS 704B — large commercial or industrial customers or governmental entities that have an annual load of one megawatt or more.
Nevada law says these entities must use at least 8,760 megawatt hours of energy annually. NV Energy would have the same qualifications in the optional pricing program rate.
McKinney-James, who is also a member of MGM Resorts’ board, said companies will see this deal as a way to stabilize energy costs and avoid an impact fee — a sum the PUC and NV Energy seek because they claim companies that exit the utility place increased costs on remaining customers.
“It’s smart of the utility to craft something to address the needs of these customers,” she said.
MGM Resorts, which left NV Energy in 2016, paid $86.9 million in exit fees, and Caesars Entertainment Corp. was assigned $47.5 million in exit fees in 2018.
Schuricht said the pricing program rate will be available to customers who take fully bundled service, meaning companies that have already left through 704B would have to return to NV Energy to be considered eligible.
As it stands, the new program is not available to residential customers.
Schuricht said if the program is successful, NV Energy will explore ways to provide a similar program to smaller commercial and residential customers.
“NV Energy is already making renewable energy available to all customers and is working on options to allow customers that value additional energy from renewable sources to have that choice,” she said through email.
The new deal
The NV Energy Optional Pricing Program Rate “offers eligible customers the ability to pay a rate directly tied to low-cost, Nevada-based solar resources,” NV Energy President and CEO Doug Cannon said in a news release. This is “in line with our own philosophy to provide all of our customers with clean energy, while keeping rates low.”
Customers would still pay base rates or distribution, transmission and fixed costs like gas transportation and wholesale capacity costs, as well as any long-term contracts that are above the market price.
Up to 565,000 megawatt hours or solar will be allotted for Southern Nevada customers, and 375,000 for customers in the north. In total, the program would provide enough power to supply between 107,100 and 153,000 homes.
This isn’t the first time NV Energy has offered more renewable resources to large customers. In 2013, the PUC approved the utility’s NV GreenEnergy Rider program, which gave select customers the ability to pay a premium to receive more or all of their energy from renewable resources.