NV Energy chief calls process for large users leaving system ‘toxic’

CARSON CITY — The head of Nevada’s largest electric utility said Tuesday the process for allowing large users to leave the network and seek cheaper power elsewhere is a “toxic” exercise but pledged nonetheless to assist in the transition if that is the final outcome.

Paul Caudill, president and chief executive officer of NV Energy, testified before the Nevada Public Utilities Commission during an application by Wynn Las Vegas LLC to leave the utility and buy its power on the open market.

Two other large casino companies, MGM Resorts International and Las Vegas Sands Corp., have similar applications pending before state regulators.

Caudill’s comments were requested by Wynn executives, who have accused the company that operates in Southern Nevada as Nevada Power Co. of excessive earnings at the expense of ratepayers.

In written testimony submitted Monday and again Tuesday, Caudill called the exit application process “toxic.”

“These proceedings pit an exiting customer against the company and, depending on your position, potentially remaining customers,” Caudill said.

One big issue is how much, if anything, the companies should have to pay to leave the utility so as not to burden other customers with having to cover the lost revenue needed for operations and maintenance.

PUC staff in one filing suggested Wynn pay an exit fee between $16 million and $28 million, depending on terms of the payment. The staff report said not assessing Wynn would eventually lead Nevada Power raising rates for residential customers by $1 million to $2 million a year.

Wynn executives dispute those calculations.

“Wynn Las Vegas firmly believes that its exit from bundled service and choice of provider … will not result in increased costs to either remaining customers or the utility, nor will it impair or otherwise adversely impact the relability of electrical service to remaining customers,” Matt Maddox, president of Wynn Resorts, said in previous testimony.

“Likewise, this proposed transaction will add energy, capacity or ancillary services to Nevada’s overall supply,” he said.

The casino company has been critical of NV Energy, claiming it has focused on paying dividends to Wall Street investors instead of focusing on what is best of ratepayers. NV Energy was purchased in 2013 by MidAmerican Energy Holdings Co., a subsidiary of Berkshire Hathaway controlled by billionaire Warren Buffett.

Caudill, in his testimony Tuesday, said he respects the big gambling and resort companies.

“They are the state’s largest employers and major taxpayers,” he said. “They are in a fiercely competitive business,” he said, adding he and utility executives have had ongoing discussions with the resort customers.

“NV Energy is learning from them what is needed to compete for business,” Caudill said. “If Wynn or any of the other … applicants decide to take energy from an alternative provider, we’ll do all we can to help the transition and continue to provide transmission and distribution reliability that they have come to expect from NV Energy as an industry leader.”

Contact Sandra Chereb at schereb@reviewjournal.com or 7750687-3901. Find on Twitter: @SandraChereb

 

 

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