Order would deny Switch’s application to leave NV Energy

CARSON CITY — A draft order prepared by the Nevada Public Utilities Commission would deny the application by the data storage company Switch to leave Nevada Power Co. and purchase its own electricity on the wholesale market.

The draft of the proposed order will be considered Wednesday by the commission. The order says that Switch’s exit application is contrary to the public interest.

Should the draft order be approved, it would deal a major blow to companies such as Switch and major hotel-casino companies seeking to leave Nevada Power to secure their own supplies of electricity.

Four gaming companies, Wynn Las Vegas, MGM Resorts International, Caesars and Las Vegas Sands Corp., have also filed to leave Nevada Power. Three have submitted letters to the PUC announcing their intentions to purchase power from a “qualified energy provider” for their energy needs.

The gaming companies that have also filed to leave Nevada Power either had no comment or did not respond Monday to a request for comment on the draft order.

There are concerns that the departure of these large companies could mean higher rates for average utility customers who have no option to leave.

The Legislature on its last day June 1 passed a bill letting the PUC decide if NV Energy needs to move forward with major renewable energy projects, given the possibility of losing major power customers.

Switch could refile its application. If it does so, the draft order says that the parties need to fully address how the long-term obligations could be captured in an ongoing charge should a one-time, time-based impact fee again fail to address the commission’s concerns — that remaining Nevada Power customers will be burdened with the unrecovered costs associated with a Switch exit.

The commission’s staff recommended that if Switch were allowed to exit Nevada Power, a company operated by NV Energy, it would have to pay a $27 million fee. Switch argued it should not have to pay more than $18.5 million to leave.

The Bureau of Consumer Protection argued in response to the application that “ongoing non-bypassable charges are preferable to one-time payments that only recover a relatively small amount of mandated costs, leaving increased burdens to remaining and new customers.”

Nevada Power said that ongoing charges are fair because otherwise the involved parties have to rely on estimates and projections to calculate a one-time fee that might over collect, harming the customer seeking to leave, or under collect, harming remaining customers.

The draft order says the commission has serious concerns that the sole use of a time-based impact fee, by itself, properly identifies the costs and stranded investments necessary to ensure that remaining customers do not pay increased costs as a result of a customer exiting Nevada Power.

Switch filed an application with the PUC in 2014 to leave Nevada Power and secure its own electricity independently. The company is using a 2001 law approved by the Legislature allowing companies to leave the retail market.

The original intent of the 2001 legislation was to help utility customers because there was so much demand for energy that costs were very high. At the time, if large users left and acquired their own electricity, ratepayers would benefit.

But in 2015 electricity can be acquired more cheaply on the wholesale market by large customers and so there is some effort by companies such as Switch to make the change using the 14-year-old law that was enacted for other reasons.

In its filing in November, Switch said it intended to acquire electricity from Exelon Generation Co., doing business as Constellation, which is active in the Western Electricity Coordinating Council wholesale power market.

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