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NV Energy Pays Another Big Customer Not to Leave

Published reports say that Nevada-based NV  Energy will pay $1.1 million a year to Clark County, home of Las Vegas,  to ensure the county does not  leave its electric service.

County commissioners voted unanimously in early August to adopt the proposed five-year contract. Reports said the deal is at least the fourth with a government agency that will receive direct cash payments from the utility in return for a promise not to consider leaving NV Energy for another electric provider.

The utility has entered into similar contracts with the city of Henderson, the Las Vegas Convention and Visitors Authority and the Clark County School District. The entities agreed  not to leave the utility and said they would enroll in a special Optional Pricing Program Rate (OPPR) for large utility customers by 2022.

In a statement, NV Energy spokeswoman Jennifer Schuricht said that the contract would help the utility “protect other customers from potential cost increases.”

The number of large customers who have sought to leave the utility for another power provider under what’s known as the 704B process — the state law that allows large power users to use an alternative power provider in return for an exit fee intended to keep other ratepayers whole — has prompted NV Energy to warn that the loss of its largest customers would hurt future electric demand and shift millions of dollars in costs to other customers.

Reports said that since mid-2018, at least 14 large Nevada businesses and government agencies filed 704B applications with state regulators; six have withdrawn their applications, seven were granted the right to leave and one is pending.

Since May, NV Energy has announced similar long-term arrangements or deals with several other customers, including Station Casinos, the Cosmopolitan, Las Vegas Sands, the Atlantis, Golden Gaming and South Point. NV Energy has declined to say whether those deals, which are not required to be publicly disclosed to the Public Utilities Commission, included similar payments.

Reports said that the $1.1 million annual payment to Clark County would bring total payments from the utility to government agencies to $3 million a year. That includes $1.5 million to the school district, $250,000 to Henderson and $650,000 to the visitor’s agency.

The contract itself largely follows the same outline as the contracts with other Southern Nevada agencies — guaranteeing $1.1 million in payments for 2019, 2020 and 2021, and requiring the county enroll in the OPPR program by 2022. The proposed OPPR pricing program, which would offer a flat rate based on new large-scale solar projects, is being promoted by the utility as an alternative for large businesses that have considered leaving the utility. Reports said the plan has faced criticism as too generous to participants. The utility temporarily withdrew its OPPR application in June.

In one example, the utility estimated that the Nevada System of Higher Education would save $381,000 on its power bills every year under the program as it was initially proposed.

The contract with Clark County — which never filed a 704B application — also contains language noting the utility plans to file for a $120 million rate reduction in 2021 and includes a requirement to reduce incentive payments based on estimated savings if the PUC approves a higher rate reduction. It also contains a promise to continue cash payments into 2022 and 2023 if the savings from the OPPR rate don’t reach at least $1.1 million annually, and a requirement that Clark County refund all “incentive” payments if the five-year agreement is terminated early for any reason.

And as with the other contracts, the agreement with Clark County contains a confidentiality notice prohibiting either party from issuing “press releases or similar public announcements” without prior written consent of the other party.

DW Keefer's picture

Thank DW for the Post!

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Bob Meinetz's picture
Bob Meinetz on Aug 10, 2019 2:19 pm GMT

DW, though your article attempts to cast NV Energy's inducement in a negative light, welcome to the world of free-market electricity - there's no difference between their inducement and the special offer of a CCA to leave NV Energy.

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