Officials for MGM Resorts International and Wynn Resorts say their respective companies will pay exit fees to stop buying power from NV Energy and seek other sources.
MGM Resorts International in June filed necessary paperwork with the Nevada Public Utilities Commission to exit its agreement with Warren Buffet-owned Nevada Power, which is Nevada’s largest public utility and does business as NV Energy.
Wynn Resorts also filed paperwork to keep its exit application active and plans a late-year exit from the public utility.
MGM, Wynn Resorts, and Las Vegas Sands previously filed applications to exit their agreements with the utility, but were told they would have to pay more than $126 million in combined exit fees to do so.
Nevada Power says it needs the money to offset costs incurred to ensure stable energy supplies for the power-hungry casino on the Las Vegas Strip. If it can’t recoup its investment costs over time from the casinos, then it says it will have to raise rates for its mostly residential customers.
Las Vegas Sands did not file the necessary paperwork to exit the utility by the May 19 deadline and likely will continue buying its power from Nevada Power.
To leave the utility, MGM will have to pay $86.9 million, while Wynn would have to pay $15.7 million, according to the Public Utility Commission.
The commission also says Las Vegas Sands would have to pay $23.9 million to leave its agreement with Nevada Power.
In its filing, MGM Executive Vice President John McManus says the company is “aggressively pursuing renewable energy sources” in order to reduce its environmental impact.
It filing indicates MGM would buy its power from Tenaska Power Services, while Wynn says it would obtain energy from Exelon. The power would be delivered via Nevada Power’s existing power lines.
The Public Utilities Commission will review the exit applications and determine if all conditions are met for the casino corporations to leave their agreements with Nevada Power, which Buffet bought three years ago.
Nevada in 2001 obtained most of its energy on the open market, and a law enacted that year enables large users of electricity to buy their energy from other sources.
The idea at the time was to lessen the demand on the local power grid, but Nevada Power since then greatly improved its infrastructure and now produces about 80 percent of state’s energy.
Those improvements, including solar plants and propane-powered generation sites, required a great deal of investment that the utility wants the casinos to pay up front before they buy power elsewhere.
MGM properties account for about 4.86 percent of the utility’s total power consumption.
Berkshire Hathaway’s Mid American Energy Holdings bought Nevada Power in 2013. Since then, the utility fought against agreements enabling Nevada residential users to get use solar energy and has raised its rates.
The increased energy rates have drawn criticism from casino operators, who say the Buffet-owned utility should be lowering its rates but instead is reaping excessive profits.
