It all started November 2014 when the Las Vegas data storage company, Switch, petitioned the Nevada Public Utilities Commission [NPUC] their intention to leave NV Energy, owned by Warren Buffett’s Berkshire Hathaway. The application affirmed Switch’s plan to purchase electrical power directly from energy wholesaler Exelon Generation Co., dba Constellation.

Three major casino corporations, Wynn Las Vegas, MGM Resorts International, and Las Vegas Sands Corp. followed suit in April of this year. According to the NPUC these corporations account for 5% of sales in the region. And even though wholesale energy prices have been dropping, retail pricing has continued to rise.

Cassandra Sweet reporting for the Wall Street Journal disclosed that while Berkshire negotiated 3.9 cents a kilowatt-hour for solar-sourced power and 3.5 cents a kilowatt-hour for conventionally sourced electricity, down 34% from 2014 wholesale pricing, NV Energy retail pricing rose, charging between 9 and 10 cents per kilowatt-hour to the casinos. Purchasing their power needs directly from wholesalers could save the casinos up to 40% representing millions per year.

In 2001 the Nevada legislature approved utility exits, and in doing so projected that it would benefit exiting customers through lower rates. Now the utility companies are claiming just the opposite – that utility prices would rise for the remaining retail customers when large users exit the system.

To offset the projected price increases, the petitioning casino corporations are being asked to pay “exit fees.” Sean Whaley of the Las Vegas Review-Journal reported in August that the NPUC has estimated these costs at nearly $131 million, with MGM Resorts, the largest of the three, to pay just under $90 million. Such exorbitant fees may make it too expensive for the corporations to exit from Nevada’s power monopoly.

In the meantime, Sands and MGM casinos are installing large arrays of solar panels on their properties’ rooftops, and gaining significant financial benefits in doing so.

The NPUC’s response to the casino corporations’ petitions is expected by December of this year.

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