Nevada’s public utility calls for higher impact fees to be imposed on departing corporate customers
Major companies leaving NV Energy could be required to pay a higher “impact fee” if Nevada regulators agree to consider the state public utility’s recent call for the formula used to determine said fee to be substantially restructured, The Nevada Independent reports.
Under a 2001 law, large power users can be allowed to split from NV Energy as long as the Nevada Public Utilities Commission rules that the departure would not harm public interest. In addition, such users should pay an exit fee or impact fee that is determined by the commission. The fee is used to reimburse remaining residential customers for the investments NV Energy has made for its larger consumers.
NV Energy said in an “alternative impact analysis” submitted to the Public Utilities Commission last week that the formula the regulator uses to determine the exit fee should be changed. The public utility further said in its analysis that it could lose millions of dollars as a result from the departure of a number of large commercial and industrial customers, if no changes are implemented in due time.
NV Energy also pointed out that its remaining customers will have to pay base tariff general rates $17 million higher than they would have had been charged in the next general review proceeding and $30.3 million higher in the subsequent general rate review proceeding, if the contested formula remains the same.
Extending the Time Period for the Impact Fee
NV Energy is urging the utilities regulator to extend the time period for which the exit fee is calculated from six years to 18 years, and to also extend the time period for non-bypassable charges from six years to nine years.
Nevada’s public utility is also challenging the contemporary interpretation of the 2001 law that requires an entity’s departure to be only approved if “the public interest” is not harmed. NV Energy pointed out that the law was adopted to help it cope with the extremely high demand for electricity, which it was not able to meet at the time. The first companies that split from the utility did so to built their own power plants. However, NV Energy noted in last week’s analysis that more recent businesses have opted to leave have contracted with alternative power suppliers.
NV Energy submitted its analysis as part of the application of South Point Hotel and Casino in Las Vegas to split from the utility. A number of major casino companies have left NV Energy’s electric service in recent years, including MGM Resorts International and Caesars Entertainment Corp.. Las Vegas Sands also filed an application a few years ago, but withdrew it as it deemed the impact fee it was required to pay too high. MGM paid an exit fee of $86.9 million in 2016, while Caesars was charged a $47.5 million fee the following year.
A record number of ten businesses filed to leave the utility last year, with some of those being SLS Las Vegas, Boyd Gaming, Grand Sierra Resort, as well as the Raiders stadium, currently under development in Las Vegas.
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