NPUC Staff Proposes $128 Million in Exit Fees for Three Las Vegas Casinos

by | Aug 26, 2015

Three casino companies are betting big bucks that they will save more than the required utility exit fees when they terminate their relationship with NV Energy and begin powering their operations with natural gas and renewable energy.

The Nevada PUC’s (NPUC’s) regulatory operations staff submitted its exit fee estimates on August 18 for MGM Resorts International, Las Vegas Sands and Wynn Resorts. According to the Las Vegas Sun, their aggregated exit charges –meant to cover the costs of new power plants, maintenance, commodity prices, fees and other factors the utility had previously forecasted with the casinos as part of its customer base  – would add up to $128 million.

Currently, the casinos represent 7 percent of the NV Energy customer base. The exit charges will protect other ratepayers from being hit with major increases on their monthly invoices.

Separately, MGM would pay $88.2 million; the Las Vegas Sands, $23.9 million; and Wynn Resorts, 16.6 million. They are taking advantage of a 2001 law — Chapter 704B — that permits big ratepayers to leave, if they connect new generation to the grid, receive NPUC approval and pay an exit fee.

The law passed at a time when NV Energy purchased most of its electricity from other companies and participated in a volatile spot market that saw constant fluctuations in price, the Las Vegas Sun reports. Now the utility owns a majority of the power plants on which it relies and has stabilized costs for ratepayers.

Interestingly enough, the utility now claims to have shifted from using 100 percent coal power to running on 60 percent natural gas and nearly 20 percent renewables.

The casino companies and NV Energy will submit responses to the regulatory staff’s suggestions within the next month. The three commissioners will hold hearings in October before they vote to approve the proposed casino exits.

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