Las Vegas Casinos to Pay Impact Fees to Leave Nevada Power as Energy Provider
In May 2016, MGM Resorts (MGM) and Wynn Resorts (Wynn) each filed with the Public Utilities Commission of Nevada to replace Nevada Power with an alternative energy provider. In filing this application, MGM and Wynn agreed to pay $86.9 million and $15.7 million, respectively, in impact fees to Nevada Power.
- In December 2015, the Commission approved exit applications for Las Vegas Sands (Sands), MGM, and Wynn thereby permitting the companies to select alternative energy providers
- The Commission’s order required the companies to submit a second application identifying the specific energy facilities that will provide power and pay an impact fee to ensure the departure does not burden Nevada Power or increase costs for remaining customers
- MGM plans to purchase power from Tenaska Power Services Corporation and end energy service with Nevada Power by October 1. Wynn plans to purchase power from Constellation Energy Group and end energy service with Nevada Power in late 2016
- Both companies will continue to use Nevada Power for transmission and distribution services
- Sands did not file a second application and, consequently, will continue to receive energy services from Nevada Power
- Over a six-year period, the three companies accounted for more than 7% of Nevada Power’s annual energy sales (MGM – 4.86% of sales, Sands – 1.19% of sales, Wynn – 0.98% of sales)
- State law passed in 2001 allows large energy customers to purchase power from a third-party provider as long as they receive Commission approval and pay an impact fee
Noting a desire to aggressively pursue renewable energy, MGM’s actions represent an extreme example of a corporation pursuing renewable alternatives. Despite the unique circumstances in Nevada, there is a growing number of large corporations seeking renewable alternatives to traditional supply offered by incumbent utilities. In 2015, corporate-direct power purchase agreements (PPAs) accounted for the majority of new wind PPAs in the United States.
Las Vegas Review Journal: MGM Resorts, Wynn Resorts file to leave Nevada Power; Sands doesn’t
Commission Dockets: Las Vegas Sands (15-05002), MGM Resorts (15-05017), and Wynn Resorts (15-05006)
This report is part of the Clean Tech & Sustainability Minute series. To view all featured Minutes, please click here.View More
Welcome to ScottMadden!
Sussex Economic Advisors is now part of ScottMadden. We invite you to learn more about our expanded firm. Please use the Contact Us form to request additional information.