Nevada regulators reject Switch bid to leave power grid

LAS VEGAS (AP) - A Las Vegas data storage company that uses lots of electricity can't unplug from the main power supplier in the state, utility regulators decided Wednesday.

The Nevada Public Utilities Commission voted 2-1 to reject a request by Switch to be allowed to leave NV Energy (NYSE: NVE) and go it alone to produce and buy the power that it needs.

State consumer advocate Eric Witkoski said afterward that the key concern was that remaining NV Energy customers would be stuck with higher costs.

"A lot of people perceive that it's not fair to let Switch leave," Witkoski said. "But it would be fair if the remaining customers aren't harmed. I think the commission is trying to come up with a fair answer so that Switch pays an appropriate exit fee that doesn't leave customers with an unfair burden."

The company can seek reconsideration or file another request at a later date, but Witkoski said it could face the same outcome.

Adam Kramer, a spokesman for Switch, said company officials had no immediate comment.

An NV Energy spokeswoman didn't immediately respond to messages Wednesday.

Switch is one of NV Energy's biggest private customers, using some 34 megawatts of electricity for data center power, security and cooling. Its facilities include stacks of thousands of servers owned by more than 1,000 clients including eBay Inc., Xerox Corp., Zappos, Amazon.com Inc., Google Inc., Shutterfly Inc. and the U.S. government.

Switch had said it wanted to cut costs and use 100 percent renewable energy in coming years.

The PUC decision could make it harder for several big Las Vegas Strip casino companies - including MGM Resorts International, Wynn Resorts Ltd. and Las Vegas Sands Corp. - that have also applied to withdraw from the public energy grid.

"They'll have to look at this as a model," Witkoski said.

MGM Resorts uses 174 megawatts of electricity to supply its 10 major Las Vegas resorts, company spokeswoman Mary Hynes said. It also boasts a rooftop solar array that provides up to 6.2 megawatts at its Mandalay Bay property. The company seeks to partner with Tenaska Power Services to supply its electricity.

Wynn uses about 31 megawatts of electricity at its Wynn and Encore properties, company spokesman Michael Weaver said.

Applications to pull out of the public grid point to a 2001 state law that lets companies that draw more than 1 megawatt of power cut ties to NV Energy if they pay an exit fee that compensates remaining customers.

In the Switch case, a three-year span was considered, and figures ranging from $18 million to $50 million were discussed by company, commission and utility representatives.

Witkoski said the main problem was that some costs to NV Energy that would be factored into the exit of a large customer like Switch, like decommissioning existing coal-fired power plants, won't be known for several years.

The commission ruling may point to exit fee calculations taking into account more than three years, he said.

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