MGM Resorts files application to leave Nevada Power Co.
The application dated May 12 was filed with the Nevada Public Utilities Commission.
MGM operates several major hotels and casinos in Las Vegas, including Aria Resort & Casino, Bellagio, Circus Circus Hotel Casino, Excalibur Hotel and Casino, Luxor Hotel and Casino, Mandalay Bay Resort & Casino, MGM Grand Las Vegas, The Mirage, Monte Carlo Resort and Casino, New York-New York Hotel & Casino and Signature at MGM Grand.
The company’s application says it intends to enter into an agreement with Tenaska Power Services Co. of Arlington, Texas, to acquire the necessary energy, capacity and ancillary services required to ensure the delivery of energy to MGM.
Tenaska’s parent company, Tenaska Energy Inc., has developed generation facilities across the U.S. including several large natural gas and solar facilities in California, the application says.
The company plans to begin receiving electricity from the company by about Feb. 1, 2016.
MGM says it will pay an impact fee, if necessary, to cover its share of expenses upon leaving Nevada Power, but that the company’s exit “will not be contrary to the public interest, or otherwise place undue burdens on remaining utility ratepayers.”
Information about the amount of power used by the company is confidential.
Caesars is also expected to file an application to leave Nevada Power, as allowed under a 2001 law enacted by the Nevada Legislature.
The four gaming companies would join the data storage company Switch, which filed an application to leave last year. The PUC is expected to make a decision on the Switch request within the next few weeks.
Switch’s departure is expected to be approved. The only issue is the amount of the exit fee the company should pay to do so. Switch argues the fee should be no more than $18.5 million to leave the retail market as a Nevada Power customer. The Nevada Public Utilities Commission staff has recommended a $27 million fee.
It will take several months for the PUC to process the gaming applications.
There is a concern among some officials that the departure of Switch and other large companies could end up costing the average utility customer in the form of higher rates. Nevada Power, part of NV Energy, has developed its own electricity generation resources over the past several years based on the consumption that includes the companies now seeking to exit.
Nevada Power could end up with surplus power that it would have to dispose of on the wholesale market if the companies follow through with their plans.
The four gaming companies consume about 370 megawatts of electricity at the time of year that Nevada’s Power electricity demand is at its highest level, known technically as “coincident peak.” This peak level is important for the utility because it has to plan for the amount of electricity needed at peak demand.