MGM to Exit NV Energy on October 1; Wynn to Withdraw Later This Year

The Nevada Public Utilities Commission (PUCN) has found that MGM Resorts International and Wynn Las Vegas (Docket Nos. 15-0517 and 15-05006, respectively) have complied with all outstanding requirements – and that the casinos may withdraw from NV Energy’s bundled electric services program this year, instead purchasing their energy on the open market.

The two Strip hotel-casino owners will be the first to leave in more than a decade, using a 2001 law enacted by the Nevada Legislature, according to a report by the Las Vegas Review-Journal. The statue, NRS 704b, permits companies to cut ties with the utility, if they consume more than 1 megawatt (MW) of power annually, pay an exit fee, and receive approval from the PUCN.

In a filing with the Nevada Public Utilities Commission on July 8, MGM Executive Vice President John McManus said the casino would become a distribution-only services customer of Nevada Power, which is part of NV Energy. Going forward, MGM will purchase its power from Omaha, Nebraska-based Tenaska Power Services.

MGM said it expects to pursue its exit application by October 1; Wynn will make its departure “later this year,” the company has said.

To shield remaining NV Energy customers from paying higher rates in the wake of the casino departures, orders in the two cases mandate that the casinos should pay a cumulative $102,665 million plus recurring fees and charges to recover certain ongoing costs “that cannot currently be quantified.”

Indeed, the commission said, “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.”

Specifically, MGM Resorts will pay $86.927 million; Wynn Las Vegas will pay $15.738 million.

The Las Vegas Sands also had filed to exit from Nevada Energy, but did not meet its deadlines for compliance filing with the PUCN. In filings, the news outlet Vegas Inc, reported, the Sands had repeatedly disputed the fees that the commission assessed. A lawyer for the company called the fees “exorbitant and unjustified” in one document filed with the commission. Its decision to forgo its exit does not mean the company is walking away. Ron Reese, a Sands spokesman, declined to get into specifics, but said Sands would “remain active on the issue overall.”

Hearings in each case were conducted last October and November. At those hearings, the casinos made the case that they were substantially overpaying NV Energy – which provides electricity to 2.4 million electric customers in the Silver State.