PUC offers split decision: Station Casinos must pay $15 million to escape NV Energy, new biofuels company off the hook
Station Casinos will need to pay a nearly $15 million fee to leave NV Energy as a customer after a decision by state regulators, but no such fees will be assessed to an under-construction biofuels company also seeking alternatives to the utility.
At a commission meeting on Wednesday, the state’s Public Utilities Commission approved two draft orders laying out the next steps for the two companies, Stations Casinos and Fulcrum Sierra Biofuels, to leave NV Energy’s service territory and purchase electricity from a different provider.
The two companies made the applications under a state law that allows large power customers to file an “exit” application from NV Energy and purchase power on the open market, often to obtain cheaper rates or a different fuel mix. But the commission is allowed to assess an “impact fee” — based on projected electric use and other incurred costs — on departing companies to avoid leaving other utility customers with unexpected costs.
Station Casinos, which filed its application to leave the utility in June, was assessed either a $18.1 million fee payable over six years, or a $14.9 million up-front charge due within 120 days if it wants to proceed with the application. A spokeswoman for Station Casinos didn’t respond to an email asking whether the company planned to pay the exit fee.
Commissioners rejected several proposed changes to the impact fee methodology proposed by the casino company, including an alternative projection of the company’s electric usage and unspecified energy efficiency improvements promised by the company (called “speculative” by the commission). It also turned down a request to shorten the load forecast period used to project how much electricity the company will use from six years to three, in part because of concerns that the increasing number of companies filing to leave NV Energy could shift risk onto the utility’s other customers.
“The Commission is concerned that these current indicators reveal a trend towards a level of increased risk to remaining bundled customers as load forecasts decline and applications to transition to (transmission) service under NRS Chapter 704B increase,” the order stated, referring to section of state law that allows companies to leave the utility.
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, Reno-based Atlantis Casino Resort Spa, a company affiliated with the Raiders and a Las Vegas building supplies company. NV Energy estimated last month that it had 42 remaining non-government and six governmental customers eligible to leave the utility.
The commission also denied a request by NV Energy to levy a slew of charges on Fulcrum Sierra’s under-construction biofuels plant, which also applied to leave the utility’s service ahead of the plant’s scheduled opening next year.
Although the company has not begun purchasing electricity from the utility, NV Energy nevertheless asked commissioners to tack a $6.3 million “impact fee” on to the company’s exit application to address long-term energy planning concerns and “lost portfolio optimization” opportunity costs associated with the utility preemptively losing a major customer.
The biofuels company opposed imposition of some of the fees as “discriminatory” and possibly illegal, saying they would foster an “anti-competitive barrier to competition.” The commission sided with Fulcrum, saying it would levy no “impact fee” and assess only two “non-bypassable” charges on the company that are charged to all of its customers, regardless if they are fully bundled or only transmission-based.
But the decision wasn’t precedent-setting; the commission wrote in its order that the decision to not assess an impact fee “should not be construed as foreclosing the Commission from doing so for a future applicant should the facts and circumstances support that determination at that time.”
The commission also rejected a request by the utility and its own staff to assess a fee on Fulcrum to help pay for the retirement of the coal-burning Valmy Plant, calling it inappropriate as the company “has never been, and never will be” served by power generated from that plant.
Instead, the commission said it would bring up studying how to “equitably” spread the costs of retiring the plant among NV Energy’s full-service customers and transmission only customers such as Fulcrum.
One standard in both orders was a decision to revisit any potential costs related to possible passage of the Energy Choice Initiative, which voters will decide next week. Commissioners said it was impossible to know any benefits or costs that the proposed constitutional amendment would offer at this point, leaving the door open to revisiting their decision and charges or benefits assessed to the company.
Approval of the draft orders doesn’t automatically mean that the companies will exit NV Energy’s service; the orders themselves lay out a variety of required next steps for each company to follow, and failure to do so means they will remain NV Energy customers.
Disclosure: Several Nevada Independent donors are mentioned in this story. You can see a full list of donors here.