NV Energy, a utility owned by billionaire Warren Buffet’s Berkshire Hathaway Inc., will have two less customers beginning October 1 when casino giants Wynn Resorts Ltd. and MGM Resorts International stop buying electricity from the Nevada utility.
Nevada Public Utilities Commission (NPUC) filings indicate that applications seeking to exit NV Energy have been submitted with Nevada regulators by both MGM and Wynn. According to a filing with the commission on Thursday, MGM said it will ante up $86.9 million for an exit fee and depart by October 1. Included in the filing to Nevada regulators, a letter written by MGM Executive Vice President John McManus, stated, “It is our objective to reduce MGM’s environmental impact by decreasing the use of energy and aggressively pursuing renewable energy sources,” according to Bloomberg.
Buffet purchased NV Energy about three years ago and since then has been challenged with the threat of electricity customers leaving the utility. The company has also been embroiled in a mufti-year fight with developers of rooftop solar over policies that permit homeowners who install solar panels on the rooftops of their houses to sell power back.
MGM, Wynn Las Vegas, and Las Vegas Sands Corp., three of the largest casino operators in Las Vegas, won regulatory approval last year to discontinue the services of NV Energy if they paid almost $127 million in impact fees. At that time, the NPUC said in a statement, “These fees are necessary because NV Energy’s remaining ratepayers would otherwise be forced to pay increased rates to allow recovery of costs already incurred to provide reliable electric service to the casinos.” According to the regulators statement last year, in order to leave Buffet’s utility the conditions would require Wynn to pay $15.7 million, Las Vegas Sands would have to ante up $23.9 million, and MGM would have to let go of $86.9 million. And according to an e-mailed statement to Bloomberg from Peter Kostes, a spokesman for the Nevada Public Utility Commission, casinos wanting to leave the utility had until May 19 to make filings. Kostes said that commission will determine if all of the exit terms have been met by the casinos.
A spokesman for Las Vegas Sands, Ron Reese, said in an emailed statement that an application to leave the utility was not submitted by the company. In another statement that was emailed to Bloomberg, Jennifer Schuricht, a spokeswoman for NV Energy, said, “We will continue to work with MGM to meet their needs as a transmission and distribution customer of NV Energy.” According to the filing, a power purchase contract has been entered into between MGM and Tenaska Power Services Co., while Wynn will purchase power from Exelon Corp. according to a May 18 filing. Both casinos, however, will still use the utility’s wires for electricity deliveries.
A 2001 law permitting large customers to purchase electricity from a third party, as long as the NPUC approves and exit fees are paid, enables the casinos requests to exit NV Energy. Since that time, gas and solar plants have been built by NV Energy and it is now almost completely self-sustainable. Rates have increased due to the costs of those facilities.