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The state of Nevada’s Public Utility Commission (PUC) voted 2-1 to reject Switch Communication’s application to leave NV Energy, a subsidiary of Berkshire Hathaway Energy (BHE). Switch is a developer and operator of data center facilities.
Despite the rejection, it looks inevitable that Switch will move to another energy supplier, and it is all just a matter determining the appropriate exit fee.
The PUC had proposed a $27 million exit fee, and Switch asked to only pay $18.5 million.
Casinos Want to Leave Too
Switch Communications is not the only one pushing to leave the utility. Caesars, Wynn Las Vegas, MGM Resorts International, and Las Vegas Sands Corp. are all now planning to purchase their power from another “qualified energy provider,” using the exit provision passed by the Nevada Legislature in 2001.
Heated Accusations from Wynn Las Vegas
In testimony before the PUC, Matt Maddox, president of Wynn Resorts, accused NV Energy of reaping huge profits from Nevada customers and taking the profits back to parent company Berkshire Hathaway. The accusation is inaccurate, at least as to the ultimate destination of any profits, as Berkshire Hathaway lets BHE retain all of its earnings.
A big part of the conflict is related to who will bear the cost of closing the Reid Gardner coal-fired units in Moapa, Nevada. NV Energy has announced it will end its use of coal for electricity generation by 2019. The move is in accordance with Nevada’s Senate Bill 123 of the 2013 session that required NV Energy to close its lower-cost coal-fired generation facility.
The estimated $100 million in plant closing costs will be borne by ratepayers, and the casinos and Switch are hoping to leave before those costs are passed on to consumers.
© 2015 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future performance.