Switch’s exit from Nevada Power with lower fee called contrary to public interest
CARSON CITY — Allowing data storage company Switch to leave Nevada Power with a lower “exit fee” than recommended by state regulators would expose the utility and its remaining customers to the volatile purchased power market and would not be in the public interest, a member of the PUC staff has testified.
Switch argues the fee should be no more than $18.5 million to leave the retail market as a Nevada Power customer. The Nevada Public Utilities Commission staff has recommended a $27 million fee.
Paul Maguire with the PUC said the lower fee would cause Nevada Power and other ratepayers to bear the risk of selling excess capacity and energy — that was built and procured in part on Switch’s behalf — in the purchased power market.
“Placing this risk solely on the backs of existing ratepayers is not in the public interest” and is contrary to the intent of the 2001 law, Maguire said in his earlier testimony filed in the case.
The $27 million exit fee recommended by the PUC is designed to protect the utility’s remaining customers from the costs associated with the company’s departure under a 2001 measure passed by the Nevada Legislature.
Maguire was questioned on the second day of the PUC hearing to determine the exit fee that should be charged to Switch to leave Nevada Power and buy its electricity on the wholesale market.
The hearing in front of Commission Chairwoman Alaina Burtenshaw could last through today. Burtenshaw will make her recommendation to the full commission later. The commission is expected to act on the application in May.
Four gaming companies, Wynn Las Vegas, MGM Resorts International, Caesars Entertainment and Las Vegas Sands Corp., are all expected to follow suit and leave Nevada Power. All have submitted letters to the PUC announcing their intentions to purchase power from a “qualified energy provider” for their energy needs.
There are concerns that the departure of these large companies could mean higher rates for average utility customers who have no option to leave. Residential customers can opt to participate in the rooftop solar program under a net metering law. But an effort to raise the cap to allow more people to take advantage of the program is at a stalemate in the Nevada Legislature.
Maguire said the energy world is far different in Nevada today than it was in 2001 when the law allowing large companies to exit was approved. The intent of the measure then was to alleviate pressure on Nevada Power and Sierra Pacific, now part of NV Energy, during an energy crisis, he said.
Since then, NV Energy has moved to create its own electrical generation resources so it is not dependent on the power market, Maguire said.
Contact Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801
