Several of the largest casino operators in Nevada want to sever ties to power provider NV Energy, but an analyst suggests the cost of solar power is blocking their exit.
MGM Resorts International, Wynn, and Las Vegas Sands want to leave NV Energy and pursue more affordable and sustainable energy sources, such as solar energy and natural gas. But the utility says leaving it would cause a rate hike for residential customers and wants $130 million to prevent steep rate hikes.
The casinos account for about 5 percent of NV Energy’s annual revenues, and the utility takes in about $350 million per year in total revenues, Heartland Institute Senior Fellow for Environmental Policy James Taylor said in a Las Vegas Review Journal op-ed.
The casinos argue they can save millions of dollars per year by pursuing their own energy sources, but Taylor says the problem is Nevada law requires NV Energy to pay above-market rates to buy excess electricity from small producers of solar power.
Because it must cover the costs of labor, overhead, and infrastructure when it buys power from small solar electricity producers and sell it to consumers for the same price, NV Energy loses money on solar power, Taylor says.
But if the Nevada legislature made it so NV Energy would not have to buy the excess power at rates much higher than the local market, then the casinos would not have to pay as much for their energy needs.
Reduced costs might enable the casinos to stay on with NV Energy, or they could pay a smaller sum and leave, or pay no sum at all, if the utility no longer is forced to buy excess solar power and sell it at a loss, Taylor said.
He suggests an ideal measure would let casinos buy lower-cost electric energy from other sources, while enabling NV Energy to buy electricity at wholesale prices from small solar producers, instead of making the utility pay a premium rate to subsidize the solar power industry.
Solar power equipment owners already benefit from taxpayer subsidies, including a 30 percent subsidy to cover the cost of equipment, Taylor said, and making relatively simple changes suggested could result in benefits for the gaming industry, NV Energy, and its customers.
