Las Vegas Sun

March 28, 2024

Switch appeals PUC decision on leaving NV Energy

Switch

Courtesy of Switch

Las Vegas-based data center Switch hopes to leave the energy grid and produce its own power.

Less than a month after regulators denied its application to create and purchase power without NV Energy, Las Vegas tech company Switch filed a petition asking the Public Utilities Commission of Nevada to reconsider its request to leave the utility. The push by Switch is part of a large-scale effort by some of Nevada’s biggest companies that could reshape the state's electricity market.

The move continues the company’s eight-month effort to cut ties with NV Energy, the state’s largest power company, and continues debate about a 2001 state law that gives companies the ability to end agreements with power suppliers with PUC approval.

Switch, a data storage company that works with an array of Fortune 1000 businesses, was the first company in more than a decade to apply to cut ties with NV Energy. Two mining companies — Barrick Goldstrike and Newmont Mining — both hashed out deals to leave more than 10 years ago.

Switch is one of the state’s largest private sector energy users and the forerunner in a statewide effort by big businesses to break away from NV Energy. Since May, Las Vegas Sands, MGM Resorts International and Wynn Resorts have followed suit in applying for an exit. Their combined exodus could mean a 10 percent reduction in the power company’s demand. That’s raising concerns about the effect on existing ratepayers and questions about a market dominated by NV Energy, a regulated monopoly that controls the majority of the state’s electricity supply.

In their decision, regulators worried about allowing companies to leave the utility in light of NV Energy's reliance on business from Switch and other large customers to help pay for costs of new infrastructure.

Lawmakers passed the bill regulating exits under far different energy market conditions, as a response to the 2000 energy crisis that sparked skyrocketing energy costs in Nevada. At the time, the power company generated less than half of its own energy supply and relied on the more-expensive spot market to buy power. Lawmakers said that it was intended to allow companies to avoid the high-priced fossil fuels on the spot market and build their own power plants. Today, thanks to new infrastructure and power purchase agreements, NV Energy supplies more than 80 percent of its demand.

In the petition, Switch general counsel Samuel Castor criticized the PUC’s decision, saying it relied on standards not outlined in statute. ”The Commission’s Order is unlawful and produces an unreasonable and absurd result because rather than relying upon the plain and unambiguous language of the statutes, the Commission relies upon legislative history to deny Switch’s application.”

The PUC’s three regulators have 40 days to approve the new request. If it were denied, Switch could then seek a judicial review. The company has already signaled that it may take legal action, issuing a document destruction hold to NV Energy, the PUC and the Bureau of Consumer Protection, saying that it may “take additional actions” against the PUC.

The Switch case will also set a precedent for how the PUC will address the casino applications to leave, expected to be heard in two months. On Monday, PUC officials met with legal counsel from MGM to discuss the law governing exits. The PUC called the meeting after it denied the Switch application. MGM was the only company that formally submitted proposals to the PUC. Switch, Wynn Resorts and Las Vegas Sands did not submit any information.

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