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March 24, 2017

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Switch sues PUC, NV Energy for $30 million in damages, permission to leave utility

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John Locher / AP

In this Wednesday, Sept. 9, 2015, photo, a car drives by a Switch data center in Las Vegas.

Las Vegas-based data company Switch filed a lawsuit on Tuesday alleging that Nevada utility regulators failed to treat the company equally when it denied the firm’s application last year to cut ties with NV Energy and purchase renewable energy independently. It is asking for at least $30 million in damages. It is also asking to leave NV Energy and purchase power on the open market.

In federal court, Switch alleges a violation of its 14th Amendment rights. Despite denying Switch’s application, the Public Utilities Commission of Nevada has allowed three large gaming operators to leave NV Energy’s service and purchase power from alternative electricity providers.

Switch’s complaint seeks an injunction for records, names NV Energy and alleges deceptive trade practices, fraud, civil conspiracy, conspiracy to commit fraud, negligence and gross negligence.

The lawsuit comes after it was revealed in a PUC filing last month that the agency’s former general counsel Carolyn Tanner had used the pseudonym, “DixieRaeSparx,” to post on social media and comment on several news websites with personal opinions about matters pending before the commission, an impartial and quasi-judicial body. Tanner is no longer employed at the PUC.

The Switch lawsuit alleges that Tanner influenced the utility regulators by engaging in improper communications outside the scope of the proceedings to the benefit of NV Energy.

“This is an action for wanton, reckless and intentional actions and omissions giving rise to fraud and other unlawful and unconstitutional activities perpetrated by governmental agencies and employees trusted by the people of the state of Nevada,” alleges the lawsuit, which names Tanner.

Tanner did not answer a call to a phone number listed for her on the State Bar of Nevada website.

In 2014, Switch sought to stop purchasing power from NV Energy, invoking a 2001 law that allows large electricity consumers to buy power from alternative providers. Switch was seeking to leave NV Energy and instead execute contracts to purchase its power from First Solar, which would construct a solar array here and was offering a good deal on wholesale renewable energy. But such a move required approval of the utilities commission, which denied Switch’s exit application in 2015.

Switch ultimately negotiated a settlement with NV Energy, whereby the utility would receive the contracts with First Solar and Switch would pay a premium to NV Energy so that it could fulfill a corporate pledge to source its power from entirely renewable resources, the lawsuit alleges. Switch is saying now that the agreement, which required the data company to pay NV Energy more for the renewable power, resulted from an improper proceeding and in the unjust enrichment of NV Energy.

It is asking the court to undo the settlement and allow Switch to leave NV Energy.

The lawsuit claims that Switch has “suffered monetary damages in excess of $30 million, has been required to pay (NV Energy) increased costs for renewable energy and has been deprived of its statutory and constitutional rights, including Switch’s rights to access interstate commerce.”

Switch’s suit alleges that Tanner, who was serving as the PUC’s general counsel at the time, commented improperly with the intent to influence public opinion. The lawsuit, which names two of NV Energy’s top executives, said both should have raised the issue of Tanner’s alleged interference.

The lawsuit alleges that “these actions permitted (NV Energy) to enter into the First Solar contracts for (NV Energy’s) own gain and charge Switch a premium for renewable energy Switch would have otherwise obtained directly for less, without (NV Energy) as the injected middle man.”

A spokesperson for NV Energy said the company does not comment on pending litigation.

The suit goes on to allege civil conspiracy — that Tanner and the NV Energy executives “agreed either explicitly or tacitly to act in concert to unlawfully influence the Switch (exit).”

After news broke in June that Tanner had been posting under a pseudonym, she disabled several social media accounts. The lawsuit asks the court for an injunction that retain all evidence of her online posts. It also asks for an injunction prohibiting parties from destroying evidence related to Switch. In court records, Switch said it has a pending records request with the utilities commission.

A spokesman said the commission has not been served and therefore has no comment.

Switch has been active on energy-related issues in Nevada and is an advocate of renewables. It is publicly backing a ballot initiative that would end NV Energy’s exclusive control over the state’s power supply. Earlier this year, three casino companies — Wynn Resorts, MGM Resorts International and Las Vegas Sands Corp. — were granted permission to leave NV Energy and purchase power from an alternative provider. The lawsuit names three other Northern Nevada hotel operators that have expressed their intent to leave NV Energy. Switch says in its suit that it is the only company to have been denied permission to leave after a full PUC proceeding since the exit law was passed in 2001.

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