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More Nevada Customers Seek To Take Competitive Supply, PUC Approves Terms For Others To Leave Utility Supply

Exit Fee Set at Zero For Newly Constructed Development

November 14, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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Several additional customers have filed with the Nevada PUC to take competitive electricity supply, while the PUC recently adopted orders setting forth the exit fees for other departing customers

MSG Las Vegas, LLC filed at the Nevada PUC to take competitive electric supply for its Las Vegas Sphere event venue, an 18,000-person arena being developed in the Nevada Power Company (NV Energy) service area

MSG Las Vegas said that the LV Sphere will have an annual load of approximately 95,779 MWh.

In an October 31 filing, MSG said that it is currently undertaking the process of requesting proposals from potential competitive electric suppliers

Separately, Georgia-Pacific Gypsum LLC has also filed at the Nevada PUC to take competitive electric supply for its gypsum processing facility in Apex, Nevada, in the Nevada Power Company (NV Energy) service area

Georgia-Pacific Gypsum said that its average annual load is approximately 2.5 MW

Georgia-Pacific Gypsum said that it intends to take competitive electric supply service from Tenaska Power Marketing

PUC Sets Exit Fees For Two Customers, Staff Files Recommendation For Third

Fulcrum Sierra BioFuels

The PUC also approved the applications of two customers to take competitive supply, setting terms and exit fees for their departure from bundled supply

The PUC approved the application of Fulcrum Sierra BioFuels, LLC to take competitive electric supply for a biorefinery which recently began construction in Storey County, in the Sierra Pacific Power Company (NV Energy) service area

Fulcrum estimated that the maximum number of megawatts to be delivered under the proposed competitive supply agreement is approximately 25 MW.

Fulcrum did not identify a competitive supplier for its load in the case, as it was in negotiations with suppliers. The PUC conditioned approval on Fulcrum identifying a competitive supplier within 120 days

As the Fulcrum biorefinery is a new load, the PUC said that no "impact fee" should be assessed on Fulcrum related to its exit from bundled service.

"The primary reason for an impact fee is to allocate, as best possible, the identifiable costs previously incurred by the utility to serve the load of the NRS 704B applicant such that those costs are not borne by the utility or the remaining customers. In this case, the Commission does not find that SPPC incurred costs to meet the load of Fulcrum's new Biorefinery, or that SPPC made any investments and/or facilities it would not have built or planned for in prior integrated resource plans had it known Fulcrum would not be a customer," the PUC said

Furthermore, the PUC rejected proposals from NV Energy to levy discrete fees on Fulcrum, specifically rejecting the following: RMR Costs, Lost Portfolio Optimization, Valmy Costs (retirement costs), and R-BTER, REPR, and TRED costs (various renewable programs and agreements)

Regarding Lost Portfolio Optimization costs, the PUC said, among other things, "The Commission further finds that such a fee is not warranted because there is no shortage of transmission capacity in SPPC's or NV Energy's electric system at the present."

However, for all of the discrete costs listed above the PUC said that assigning certain costs to distribution-only service (DOS) may be appropriate in the future as circumstances change, but that such costs should not be assigned to a customer in a customer-specific proceeding. Rather, NV Energy may make an application to assess such costs to all DOS customers

In particular, the PUC said, "while the Commission finds that it is inappropriate to allocate any costs associated with the retirement of Valmy to Fulcrum at this time, the Commission does acknowledge that it should address how to best allocate the costs associated with the closing of Valmy amongst SPPC's customers, including those that take DOS, in a future proceeding."

Fulcrum will be charged the non-bypassable rates of the IS-2 Irrigation Rate Program (pursuant to NRS 704.225) and the Economic Development Rate Program (EDRR), which Fulcrum did not oppose.

Additionally, pursuant to Nevada Revised Statutes 704B.360, Fulcrum shall: a) pay its share of the annual assessment levied pursuant to NRS 704.033 to the Commission and the Attorney General's Bureau of Consumer Protection; b) pay any other tax, fee or assessment that would be due to a local governmental entity had Fulcrum Sierra BioFuels, LLC continued to purchase energy, capacity or ancillary services from Sierra Pacific Power Company d/b/a NV Energy; and c) remit any tax, fee or assessment collected pursuant to item (b) to the applicable local governmental entity, and that should include assessments on the energy, capacity or ancillary services Fulcrum Sierra BioFuels, LLC purchases from its new provider.

Station Casinos

Separately, the PUC also approved the application of Station Casinos LLC, owner and operator of 10 hotels and casinos in Nevada Power Company's (NV Energy) territory, to take competitive electric supply

Station has selected Morgan Stanley Capital Group as its competitive provider.

Station's current annual load is approximately 285,000 MWh with an average hourly load of approximately 32.5 MW and a peak load of approximately 44.5 MW.

In total, the PUC established the upfront portion of Station's impact fee as approximately $18.091 million in nominal dollars and $14.954 million in net present value.

In considering the impact fee, the PUC rejected Station's proposal to weather normalize its load data. The PUC also rejected Station's proposal to adjust its load based upon expected energy efficiency program implementation

Also at issue in the case was the application of Nevada Power's (NPC) Schedule MC, which, among other things, requires NRS 704B (competitive supply) applicants who have included service locations that have already been included in a previous NRS 704B application to pay a $28,000.00 fee per service location for processing of the subsequent NRS 704B application. Nine of Station's service locations have been included in a previous NRS 704B application, resulting in an approximately $252,000.00 charge as recommended by PUC staff

However, the PUC said that, "The Commission is concerned ... that NPC has not sought to assess such a fee on any other recent NRS 704B applicant who has previously filed to transition to DOS service."

"The Commission determines in this case that it is not reasonable to assess the Schedule MC fee against those Station service locations that have been included in previous NRS 704B applications. However, if future NRS 704B applications are filed and include service locations that have been included in previous NRS 704B applications, NPC should explain its position regarding either charging or not charging a Schedule MC charge to that applicant. Ultimately, it is NPC's responsibility to recover costs addressed in its tariffs, and if the Commission finds, in a future proceeding, that the costs associated with processing NRS 704B applications has been inappropriately allocated by NPC to remaining customers, the Commission will move to disallow these costs from rates given NPC's failure to comply with its tariffs," the PUC said

Staff Issues Recommended Exit Fee For Raiders

PUC Staff has issued a recommendation for the impact fee to be assessed to LV Stadium Events Company, LLC (the "Raiders"), which as previously reported (see story here) has filed a petition with the Nevada PUC to purchase energy, capacity, and/or ancillary services from a provider of new electric resources pursuant to Chapter 704B of the Nevada Revised Statutes and Chapter 704B of the Nevada Administrative Code (in other words, to take competitive supply).

Staff said that, "With the exception of the legislatively mandated costs discussed [below], which will require a placeholder in order to determine Raiders' cost responsibly (if any) for these costs in the future, Staff does not believe there is likely an immediate calculated financial impact fee that should be assessed to the Raiders as a result of its proposed new southern Nevada loads leaving bundled retail service. However, Staffs final analysis is limited to the issues and assumptions discussed above and are unique to this instant docket only. Staff fully understands that NPC [Nevada Power] does not plan for every customer's individual load and instead plans for an aggregate amount of customer load and if every customer were to want to depart bundled retail service and argued NPC was not planning for them by name in a load forecast, the principals/foundation of resource planning would fall apart. However, given the notice period given by the Raiders in this Docket regarding its plans to construct a new facility and to not be served as a bundled customer, Staff does not believe the Raiders' proposed departure would likely result in a material impact to remaining customers and NPC such that an immediate impact fee needs to be assessed."

Staff does believe that any legislatively-mandated charges, such as those associated with the Economic Development Rate Program pursuant to NRS 704.7875, for which all customers are required to pay (including distribution and transmission-only customers), must be assessed to the Raiders' southern Nevada Loads.

"Additionally, with respect to costs associated with the retirement and clean-up of NPC's Reid Gardner and Navajo coal fired generating units, Staff believes this treatment should be uniform with the treatment of SPPC's Valmy Generating unit costs for similarly-situated 704B Applicants, namely, Fulcrum Sierra Biofuels, LLC. In Docket No. 18-06009, the Commission ordered that costs associated with the closing of Valmy amongst SPPC's customers, including those that take DOS, should be addressed in a future proceeding such as a general rate case. Similarly, Staff believes costs associated with the retirement and clean-up of Reid Gardner and Navajo coal fired generating units amongst NPC's customers, including those that take DOS, should be addressed during NPC's next general rate case, which is expected to be filed in 2020," Staff said

"Finally Staff believes the Raiders are required to pay the Commission's annual assessment pursuant to NRS 704.033 and the 5 percent county franchise fee, via all sales made by its provider of new electric resource pursuant to NRS 704B.360, and would ask the Commission to make such payments compliances in any Order granting the present Application," Staff said

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