Nevada casinos say exit fees could prevent their defection from NV Energy

Dive Brief:

  • Staff of the Nevada Public Utilities Commission believe exit fees imposed on casinos intending to leave Nevada Power's service are legal, though some clarification may be needed as to what power supplies they can then procure on the open market.
  • The Las Vegas Review-Journal reports that the utilities are expected to leave Nevada Power's service on Feb. 1, but the pricetag for the three to defect exceeds a combined $125 million.
  • The fees are designed to keep remaining customers from making up the revenue shortfall, but at least one casino believes they are too high, and the utility has inidicated there may still be a deficit if the gaming giants procure their own energy.

Dive Insight:

Did Nevada casinos gamble, and lose? MGM Resorts International, Las Vegas Sands, and Wynn Resorts have received approval to leave Nevada Power's service, but now they say the price tag may be too steep to leave.

According to the Review-Journal, regulators signed off on fees of almost $87 million for MGM, $24 million for Sands and almost $16 million for Wynn. But in a request for reconsideration, Sands told regulators the exit fees "effectively denied" its plan, along with other conditions.

Staff found the fees legitimate, however, while the casino argued they simply perpetuate the utility's monopoly.

NV Energy President and CEO Paul Caudill has decried the process for allowing large customers to defect as "toxic," and could leave remaining customers to make up revenue shortfalls. 

"These proceedings pit an exiting customer against the company and, depending on your position, potentially remaining customers," Caudill told regulators in written testimony.

The gaming giants say the utility is already over-earning and their exit will have no impact on customers. 

"Wynn Las Vegas firmly believes that its exit from bundled service and choice of provider … will not result in increased costs to either remaining customers or the utility, nor will it impair or otherwise adversely impact the reliability of electrical service to remaining customers," Wynn President Matt Maddox said in filed testimony.

Recommended Reading:

Follow on Twitter

Filed Under: Generation Regulation & Policy