NV Energy will pay $1.5 million a year to the Clark County School District over the next five years in return for the district promising not to depart utility electric service under a proposed contract up for a vote later this week.
Members of the Clark County School District’s Board of Trustees have scheduled an agenda item and possible vote during their upcoming Thursday meeting on a contract that would lock the district into an agreement to remain an NV Energy customer for the next five years, in return for annual $1.5 million in either direct cash payments or through a special rate program for large customers.
The proposed arrangement is at least the third such deal with large municipalities that includes direct cash payments in return for remaining utility customers; the city of Henderson and the Las Vegas Convention and Visitors Authority entered into similar arrangements with NV Energy in past weeks.
“NV Energy is pleased to have the school board considering a multi-year agreement with us to be their energy provider,” utility spokeswoman Jennifer
Schuricht said in an email. “We believe the agreement meets the unique energy needs of the school district at a low price to ensure more money can go into the classroom.”
Since May, NV Energy has announced similar long-term arrangements or deals with several other customers, including Station Casinos, the Cosmopolitan, Las Vegas Sands, the Atlantis, Golden Gaming and South Point. An NV Energy spokeswoman declined to say in an earlier email whether arrangements with those businesses — which are not required to be publicly reported to the Public Utilities Commission — included similar payments as part of their deals to stick with the utility.
If the contract is approved by trustees, the utility will be on the hook for at least $1.9 million in annual payments to Henderson ($250,000), the LVCVA ($650,000) and CCSD ($1.5 million) for the next five years. If similar arrangements were made with private businesses that have announced similar deals with the utility, NV Energy could be directly paying up to tens of millions of dollars every year to some of its largest customers.
The proposed contract with the school district contains many similar provisions to contracts entered into by Henderson and the LVCVA, including running for five years and requiring the district enroll in the proposed Optional Pricing Program Rate (OPPR) by 2022. The pricing program, which was proposed by the utility last year but withdrawn temporarily last week, is aimed at offering large NV Energy customers a special, renewable power-backed flat rate but has been criticized by Public Utilities Commission staff and the Bureau of Consumer Protection as overly beneficial to larger customers.
In past months, NV Energy has taken increasingly aggressive steps to stem the tide of large businesses filing so-called 704B applications to leave the utility and purchase power from other providers (in return for a typically substantial exit fee to ensure other utility customers don’t face suddenly higher costs).
The contract requires the school district to enroll in the OPPR program by 2022 if it is available and approved by the commission, and it would promise to continue paying the incentive if the program is not available or if the savings under the program are less than $1.5 million. It also contains provisions nullifying incentive payments in 2022 and 2023 if the district does not take service under the OPPR system.
It also contains language noting the utility’s plan to file a $120 million revenue reduction during its 2021 general rate case, and requirements to reduce the incentive payment based on the amount of estimated savings if the PUC approves a rate reduction greater than $120 million.
And as with Henderson and the LVCVA, the only requirement for the school district is to remain a full service customer of the utility for five years and not seek a so-called 704B exit application to depart utility service.
Another similar contractual provision concerns confidentiality; the proposed contract requires neither party to disclose information about the contract, make public announcements or disclose information exchanged regarding the contract without prior written consent, unless otherwise required by law. Unlike the agreements with Henderson and the LVCVA, the proposed contract with the school district does not contain any provisions related to helping the school district meet its renewable energy goals.
Last year, CCSD heard a presentation from a group of outside companies to have the district leave the utility and possibly entering into a long-term power purchase agreement. Trustees took no action at the time to move away from the utility.