Wynn Las Vegas LLC challenges fee for leaving as retail customer of Nevada Power
Wynn Las Vegas LLC has gone to court to challenge the $15.7 million fee it must pay to leave as a retail customer of Nevada Power Co. and secure its own energy supply on the wholesale market.
The gaming company filed a lawsuit Thursday in Clark County District Court against the Nevada Public Utilities Commission, which is requiring Wynn and two other gaming companies to pay $126.6 million in exit fees.
“The PUC has simply made up rules as it goes along so as to discourage any applicants from exiting bundled retail service,” the lawsuit alleges.
Exit fees approved by the commission in December are $86.9 million for MGM Resorts International, $23.9 million for Las Vegas Sands Corp. and $15.7 million for Wynn, plus recurring fees and charges to recover certain costs that cannot be quantified now.
The companies’ departures are the first in many years. The hotel-casinos relied on a 2001 law approved by the Nevada Legislature allowing companies to leave as utility customers to lessen pressures on electricity rates during an energy crisis.
Circumstances behind its passage no longer exist. Instead, energy prices are increasingly competitive, including those for natural gas. Large companies that exit are expected to be able to negotiate their own favorable rates for power.
“The PUC, in conjunction with its staff, disagrees with the Legislature’s policies and objectives in allowing consumers like Wynn to depart from bundled electric service,” according to Wynn’s lawsuit. “Thus, the PUC has sought to erect what it knows to be onerous obstacles so as to defeat Wynn’s rights.”
According to a statement released Tuesday by the PUC, the commission is requiring the company to pay the $15.7 million fee, “plus additional recurring charges to cover costs already incurred to provide reliable electric service to Wynn. If Wynn does not pay for these costs, remaining ratepayers will be forced to pay for them.”
The lawsuit specifically challenges the “aggregation approach” the commission uses to calculate the exit fees. The approach involved combining all of the electrical usage for the three companies, although the companies had filed separate applications to leave.
“Because of the aggregation, if, for example, MGM were to decide not to proceed with is proposed exit, then the entire basis for the PUC’s calculation self-implodes,” according to the lawsuit.
Wynn, which is represented by the Pisanelli Bice law firm, is seeking a court order to invalidate its exit fee. It also wants a judge to declare that Nevada law does not permit the PUC to commingle the electrical load of different applicants “so as to saddle Wynn with the load of other applicants.”
According to the PUC statement, the commission “will fully defend its order setting forth the conditions imposed upon Wynn that are necessary to ensure that Wynn’s exit from bundled retail electric service is not contrary to the public interest.”
“The order’s requirements reflect Wynn’s share of long-term costs that are currently embedded in NV Energy’s rates. NV Energy has incurred significant costs constructing facilities and acquiring energy resources to meet Wynn’s current and future electricity demands. The impact fees ensure that Wynn remains obligated to pay for the portion of NV Energy’s costs that it has caused. Additionally, the impact fees prevent Wynn from avoiding payment of its proportionate share of costs associated with Nevada’s legislatively-mandated energy policies.”
Nevada Power is part of NV Energy.
The Review-Journal is owned by a limited liability company controlled by the Adelson family, majority owners of Las Vegas Sands Corp.
Contact reporter Carri Geer Thevenot at cgeer@reviewjournal.com or 702-384-8710. Find her on Twitter: @CarriGeer
