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Economic development could be slowed if energy regulators charge businesses for preemptively leaving NV Energy, agency head warns

Riley Snyder
Riley Snyder

Northern Nevada’s top economic development agency is asking state energy regulators to not assess a pricey “exit fee” on an under-construction biofuels plant seeking to purchase electricity outside of NV Energy.

In a letter dated Oct. 1, Economic Development Authority of Western Nevada (EDAWN) President and CEO Mike Kazmierski wrote that “serious and adverse economic development consequences” could occur if the commission levies a costly fee against Fulcrum Sierra Biofuels, which is constructing a large plant at the Tahoe-Reno Industrial Center to refine household waste into jet fuel and other recycled fuels.

The letter comes on the heels of testimony filed by an NV Energy executive in September requesting that the state’s Public Utilities Commission levy an “impact” fee and various one-time and ongoing payments on the company to help offset costs of transmission and lost “portfolio optimization opportunities” for the utility.

“Energy costs and resource mix options are often key considerations for companies looking to move or expand here,” Kazmierski wrote in the letter. “Ensuring their ability to have meaningful access to energy options is an important tool in attracting them. If the commission imposes excessive and what appears to be unjustified financial obligations on new companies or those looking to develop new projects here, there is no doubt that there will be serious and adverse economic development consequences.”

Kazmierski was even more direct about the potential negative impact in a follow-up email sent to The Nevada Independent.

“To require a significant fee of new companies that have never been hooked up to NV Energy is a change in policy that will adversely impact our ability to attract companies like Fulcrum to our state,” he said Wednesday.

Nevada law allows large energy users to file to leave NV Energy through an application process and typically after paying an “exit” fee to the utility to ensure that other customers don’t bear any higher stranded costs.

Companies that have filed to leave NV Energy as a customer in the last three years include MGM Resorts, Switch, Wynn Resorts, Caesars Entertainment, Station Casinos, Peppermill Resorts and Reno-based Atlantis Casino Resort Spa, which filed an exit application in August.

But there’s less clarity about whether businesses can preemptively file to leave the utility before ever becoming a customer, and thus avoid a multi-million dollar exit fee. Google asked for (and received) an advisory opinion from the commission last year that would allow the search engine giant to construct a planned data center in Northern Nevada without ever becoming a regular NV Energy customer. The Oakland Raiders filed a similar application last month to pick a new electric provider for their under-construction Las Vegas stadium.

But in testimony filed last month, NV Energy executive Shawn Elicegui said the utility should be awarded various fees, including a one-time $1.179 million charge, from the company as the departure of such a large customer would impact the utility's expected load growth. Even if they purchase power from a different provider, NV Energy would still supply transmission access while also needing to provide backup power in case of emergencies.

PUC staff wrote in August that the company’s exit application would have no financial impact on the company, meaning no impact fee was warranted.

Fulcrum broke ground on its waste-to-fuel plant 20 miles from Reno in May, with a planned operation date of 2020. The company says the plant will result in 120 full time workers.

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