Dive Brief:
- NV Energy and three casinos continue to struggle over exit fees as the large power users want to leave the utility in search of cheaper power on the open market.
- NV Energy President and CEO Paul Caudill told regulators the process for allowing large customers to defect is "toxic," and potentially leaves remaining customers to make up revenue shortfalls.
- Executives at Wynn Las Vegas, however, allege NV Energy is already over-earning and if the casino is allowed to seek power elsewhere it will have no impact on remaining customers.
Dive Insight:
Major power customers are lining up to leave NV Energy's service, a process CEO Caudill has decried as "toxic" — though he told regulators that the utility will support the move if regulators ultimately approve the applications.
Along with the Wynn, MGM Resorts and Las Vegas Sands have filed similar proposals with the Nevada Public Utilities Commission, and over the summer regulators rejected a similar plan by data company Switch.
"These proceedings pit an exiting customer against the company and, depending on your position, potentially remaining customers," Caudill told regulators in written testimony.
If companies are allowed to leave they may be required to pay a fee to alleviate the impacts on remaining customers. Those amounts can be hefty — at least $16 million for Wynn — and the casino says NV Energy is already earning more than its allotted return.
PUC staff say Wynn should pay between $16 million and $28 million to leave NV Energy, and if the fee is not assessed could result in customers paying higher rates, up to $2 million more annually.
"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 reliability of electrical service to remaining customers," Wynn President Matt Maddox said in filed testimony.
The fee for Wynn to leave NV Energy is actually the lowest among the proposals. Staff estimated MGM would need to pay $128 million, and Sands would be on the hook for almost $24 million.
