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Switch sues NV Energy, Nevada PUC in $30m monopoly claim

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While Elon Musk’s Tesla piles in to take on NV Energy

Las Vegas-based Switch, best known for its SuperNAP data centers, is taking NV Energy and the Public Utilities Commission of Nevada to court after the PUC denied the company’s application to leave NV Energy as a supplier.

The $30 million lawsuit alleges a violation of the 14th Amendment rights, after the PUC allowed three large gambling operators to leave NV Energy, while Switch was allegedly forced to pay more for renewable energy. The energy company denied what it calls “baseless claims” and expressed disappointment at the court case.

Switch can’t switch

switch supernap data center las vegas

A Switch SuperNAP data center in las vegas

Source: Switch

In 2014, Switch tried to leave NV Energy, using a 2001 law that allows large electricity consumers to buy power from alternative providers. The company wanted its renewable energy to be sourced from First Solar, which was offering to build a new solar array and promised lower rates. When the PUC denied the application to leave, Switch ended up paying NV Energy - but the lawsuit claims that NV Energy itself sourced renewable electricity from First Solar and resold it a premium.

In 2016, the PUC permitted Wynn Resorts, MGM Resorts International and Las Vegas Sands Corp to leave NV Energy - but said that the companies had to pay over $125 million in order to minimize the financial impact on NV Energy. At the time, Sands told regulators that the exit fees “effectively denied” its plan to leave.

Switch says it has “suffered monetary damages in excess of $30 million, has been required to pay (NV Energy) increased costs for renewable energy and has been deprived of its statutory and constitutional rights, including Switch’s rights to access interstate commerce.” Switch, which last year unveiled a billion dollar data center in the state, claims 14 causes of action, such as deceptive trade practices and civil conspiracy.

A key component of the lawsuit falls on the actions of then-general counsel Carolyn Tanner, who was revealed to be using the handle ’DixieRaeSparx’ to Tweet and comment on news sites that were negative towards solar utility companies during a contentious PUC ruling that was still pending.

Switch says the PUC “should have known that Tanner was engaging in inappropriate activity, and abusing her role as General Counsel, and failed to enforce rules, guidelines, policies or procedures that would protect Switch against a miscarriage of justice.”

NV Energy hit back in a statement, with spokeswoman Jennifer Schuricht saying: “Switch is a very important customer to NV Energy, and given how far we thought we had come over the past two and a half years of working with their team on a variety of issues and opportunities, we are surprised and disappointed with this turn of events.”

She continued: “We will vigorously defend our company and our employees from baseless claims.”

PAC-men

nv energy, warren buffet

Source: NV Energy

In February, another effort to end NV Energy’s effective monopoly saw a ballot filed with the Secretary of State’s office to allow consumers the option to choose how they get their electricity by 2023.

The initiative was proposed by the PAC ‘Nevadans for Affordable, Clean Energy Choices’, whose backers are unknown, but it is thought that Las Vegas Sands raised nearly $700,000 for the group.

In March, Switch and Tesla backed the same group, with CEO Elon Musk saying that “solar energy is the cheapest energy today in the state of Nevada and ‘Energy Choice’ will enable Tesla and all Nevadans to choose solar.”

He also met with legislators and the state’s chief economic development official at the site of Tesla’s ambitious ‘Gigafactory’ to discuss the future of the electric grid and how Li-ion batteries could work with rooftop solar. Announced in 2015, Tesla’s Powerwall and Powerpack batteries have seen tens of thousands of pre-orders and are expected to start shipping later this year.

Elon Musk has another reason to wish NV Energy ill: Solar City, the company where he is chairman and his cousin the CEO, has suffered mightily at the hands of the Warren Buffett-owned Berkshire Hathaway, parent company of NV Energy.

Late last year, the Public Utilities Commission of Nevada made a controversial ruling that allowed NV Energy to charge higher rates and fees to solar panel users, as well as only pay a third of what it previously paid to solar users whose excess energy goes back to the grid.

Solar companies saw valuations drop on the news, with SolarCity forced to cut 550 jobs in Nevada and cease sales and installations in the state. With its shares down heavily, Musk’s Tesla is currently trying to acquire the solar company for $2.5-$3 billion.

SolarCity, which may fear further legislation in other states, has put money into the No Solar Tax PAC (as much as $2.5 million by some accounts) for its ‘Bring Back Solar to Nevada’ campaign, while NV Energy has pumped around a million dollars into the Citizens for Solar and Energy Fairness PAC.

Harry Reid, 2009

Harry Reid, 2009

Source: United States Congress

Congressional support

Companies on both sides of the monopoly debate have also spent spent liberally to court the state’s senator Harry Reid.

During the 2011-2016 election cycle SolarCity donated $7,600 to Reid, while NV Energy chipped in $17,750. The Searchlight Leadership Fund PAC founded by Reid in 1997 saw a contribution of $3,000 from NV Energy, $10,800 from SolarCity PAC between 2014 and 2016, and $10,000 from Solar Energy Industries Association (SEIA), of which SolarCity is a member.

Current SEIA Secretary & Member of the Board of Directors Scott Hennessey is the VP of policy & electricity markets, and regulatory counsel at SolarCity.

SolarCity also enlisted the help of several lobbying firms, spending $70,000 with Podesta Group, West Front Strategies, and Roberti Global for all its Washington lobbying needs.

Perhaps not coincidentally, a fundraiser for Harry Reid and the Searchlight Leadership Fund held last month in the Liaison Capitol Hill hotel was hosted by Tony Podesta, founder of Podesta Group, and recepient of the title of ’third most influential lobbyist’ from the Washingtonian magazine in 2007. In 2012, Podesta Group gave the Searchlight Leadership Fund $5,000.

Earlier this year, Senator Harry Reid announced he would back the ’Nevadans for Affordable, Clean Energy Choices’ amendment.

In 2013, Reid said in a SolarCity press release: “I was able to help pass an eight-year extension of the federal tax credits for residential and commercial solar installations in 2008 which has been instrumental in creating jobs across Nevada and the nation.

“I hope that SolarCity’s expansion will help Nevada create the regulatory and business certainty needed to continue to take advantage of Nevada’s abundant solar energy resources.”

If you want to know more about solar power for data centers, check out our recent FirstSolar webinar.

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