LAS VEGAS (KLAS) — The state should reject NV Energy’s bid to have consumers pay an extra $34 million a year for capital projects, lawyers for big casino companies argue.
The companies say the utility is going back on its word about charging ratepayers for Greenlink, a $2.5 billion project to build new power lines to carry solar energy.
Briefs from lawyers representing MGM Resorts International, a division of Caesars Entertainment, the Venetian, Wynn Resorts, Station Casinos and Boyd Gaming challenge NV Energy’s attempt to have ratepayers shoulder the development costs. Even the Southern Nevada Water Authority (SNWA) is on record in its opposition.
But NV Energy dismisses the arguments as “immaterial” and says Greenlink isn’t even the project they’re talking about. “Greenlink is a sizeable project but by far not the only project,” NV Energy said in its own brief, filed Monday afternoon.
Greenlink is a crucial part of the state’s drive to reach renewable energy goals. As work nears on enormous solar farms around the state, NV Energy needs a way to get that electricity to consumers. NV Energy would own the transmission lines.
Lawyers for the casinos point to NV Energy CEO Doug Cannon’s statements to the 2021 Nevada Legislature. He said, “Shareholders do not recover on that money until that asset goes into service.”
That’s not what’s happening two years later, lawyers argue.
But NV Energy reiterates the point: “Unlike some large projects throughout the country being funded through a combination of private and public money, the Greenlink project is funded entirely by private money — NV Energy’s shareholder and bondholders.”
Specifically, an adjusted “annual revenue requirement for general rates charged to all classes of electric customers” filed on June 5 seeks a higher “return on equity” (ROE) — 10.2% instead of the already approved rate of 9.4%. That small change adds up to $34 million a year that will be paid by customers if approved by PUCN.
One legal brief filed on behalf of Wynn Resorts, Smart Energy Alliance, Circus Circus and Hard Rock Nevada takes issue with the loosely defined “capital expenditures” identified by NV Energy. “Little detail is offered as to what these ‘capital expenditures’ are for, and (NV Energy) should be required to answer this question before any additional ROE is authorized,” the brief says.
NV Energy’s brief in reply to the casinos did not specify how the $34 million would be used. The brief said Cannon’s statements to the 2021 Legislature had “limited evidentiary value to the cost of capital” and the casinos’ objections should be disregarded.
Greenlink became a political football, giving the casinos a chance to raise old arguments as NV Energy tries to get the terms of its equity arrangement rewritten.
But before NV Energy’s response today, lawyers were convinced Greenlink was the reason, saying, “If the Greenlink transmission projects are the reason, then the Company should have to explain why they told the people of Nevada that cost recovery would not occur until the projects were completed,” the brief says.
NV Energy’s lawyers say the whole argument is misplaced because the request isn’t about Greenlink. They call the connection to Cannon’s statements to the 2021 Legislature “tenuous at best.” The brief says, “Tying Mr. Cannon’s statement to the capital structure determination in this Docket is akin to going down a proverbial rabbit hole.”
But where is the money going?
If the capital costs are not associated with Greenlink, NV Energy already has appropriate ways of raising that money without an ROE adjustment, casino lawyers argue.
NV Energy’s brief says the change is part of adjustments to ROE levels and other elements of the company’s capital structure. It’s all based on a certification over time that the PUCN reviews.
NV Energy operates as a monopoly with oversight from PUCN. Documents related to that oversight are sometimes deemed confidential, and not all the information is available to the public.
The brief filed on behalf of Caesars Enterprise Services, SNWA and MGM Resorts International further criticizes NV Energy for failing to take advantage of historically low interest rates to raise capital. “Substantial evidence in the record demonstrates that the Utility’s proposed increases are not the result of prudent business management, responsible decision-making, sound fiscal strategies, or efficient operations,” the brief says.
And it challenges another section of the request that seeks $12 million per year — for a total of $46 million in costs to ratepayers — by changing NV Energy’s equity structure.
Some of the companies aligned against NV Energy’s request have previously opposed incentives for Greenlink, saying the project would needlessly increase consumer costs.
NV Energy was acquired by Berkshire Hathaway in 2013. Its website says the company has 2,400 employees and serves 1.6 million customers in Nevada.
The utility has been criticized over the past year as rates have skyrocketed, sometimes tripling bills paid by consumers. NV Energy also faced an investigation by PUCN and scrutiny from the Nevada Legislature after power outages lingered following storms that dropped heavy snow on New Year’s Eve.