Vegas Casinos Plan to Leave Warren Buffett’s Nevada Utility
by Mark Chediak Noah Buhayer
May 20, 2016
Casino giants MGM Resorts International and Wynn Resorts Ltd. are moving forward with plans to stop buying electricity from Warren Buffett’s utility in Nevada, dealing a blow to the billionaire’s power service provider.
MGM and Wynn have submitted applications with Nevada regulators seeking permission to leave NV Energy, a utility owned by Buffett’s Berkshire Hathaway Inc., according to filings with theNevada Public Utilities Commission. MGM said it will pay an exit fee of $86.9 million and depart by Oct. 1, according to a filing on Thursday with the commission.
“It is our objective to reduce MGM’s environmental impact by decreasing the use of energy and aggressively pursuing renewable energy sources," MGM Executive Vice President John McManus said in a letter included in the filing to state regulators.
The threat of the electricity-hungry customers leaving the utility has posed a challenge to a business Buffett purchased about three years ago. NV Energy has also been involved in a multi-year fight with rooftop solar developers over policies that allow homeowners who put panels on their roofs to sell power back to the grid.
Last year, three of Las Vegas’s largest casino operators including MGM, Las Vegas Sands Corp. and Wynn Las Vegas won approval from state regulators to stop buying power from NV Energy if they paid combined exit fees of almost $127 million.
Filing Deadline
Casinos that wanted to leave the utility needed to make filings by May 19, Peter Kostes, a spokesman for the Nevada Public Utility Commission, said in an e-mailed statement. The commission will make a determination if the casinos have complied with all the terms needed to exit the utility, Kostes said.
Las Vegas Sands didn’t submit an application to leave NV Energy, Ron Reese, a spokesman, said in an e-mailed statement.
“We will continue to work with MGM to meet their needs as a transmission and distribution customer of NV Energy,” Jennifer Schuricht, a spokeswoman for NV Energy, said in an e-mailed statement. Schuricht didn’t immediately return a separate request seeking comment on Wynn’s application.
MGM has entered into a power purchase contract with Tenaska Power Services Co., the filing said. Wynn will buy power from Exelon Corp., according to a filing on May 18. Both casinos will continue to use NV Energy’s wires for electricity deliveries.
"We are moving forward with the process and plan to exit the grid late this year," Wynn spokesman Michael Weaver said in an e-mailed statement.
The casinos can ask to leave NV Energy because of a 2001 law that permits large customers to buy electricity from a third party as long as they pay an exit fee and get approval from the utilities commission. When the measure passed, Nevada got most of its electricity on the open market and was trying to encourage new generation in the state.
Since then, NV Energy has built gas and solar plants and now supplies most of its own power.
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