MGM Resorts witness says Nevada Power is 'over-earning,' tone deaf to economy
Review-Journal Capital Bureau
CARSON CITY — A witness for MGM Resorts International is highly critical of Nevada Power Co. in testimony filed with the state Public Utilities Commission, saying that the gaming company intends to proceed with its application to leave the utility as a retail customer despite the potential of having to pay an "exit fee" of as much as $90 million.
The casino company's witness called Nevada Power tone-deaf and "significantly over-earning" for several years.
Testimony was submitted Tuesday
on behalf of MGM by Mark Garrett, president of a company specializing
in public utility regulation. In that testimony, Garrett described
Nevada Power, a subsidiary of NV Energy serving Southern Nevada, as
"tone deaf to the current and ongoing economic recession."
Instead
of filing applications to reduce its rates to eliminate its
over-earnings and to bring its prices in line with market-based prices
in the region, Nevada Power has continued to seek further increases even
when they are clearly not in the public interest and are detrimental to
the Nevada economy, he said.
Nevada Power had no comment on the testimony.
Garrett
cited the company's proposed solar project at the Moapa River Paiute
Indian Reservation that was rejected by the PUC last year as an example
of the company aggressively pursuing a profit-motivated project at above
market rates that was not in the public interest.
He
also cites a proposal in the company's latest capacity replacement
filling that would terminate a power agreement with Griffith Energy that
provides gas-powered electricity to Nevada Power customers during the
peak months in Southern Nevada from June through September.
The
agreement would be terminated in 2017 and Nevada Power is instead
proposing to replace the 570 megawatts from the Griffith plant with a
new company-owned 706 megawatt gas plant, which would increase estimated
ratepayer costs by more than $70 million a year, Garrett said.
"Again, the company's efforts appear to be driven by a desire to add to its rate base to increase earnings," he said.
Garrett
said that Nevada Power is continuing to over-earn, exceeding its
authorized rate of return of 9.8 percent by hitting an 11 percent return
for the period ending June 30. The company over-earned an estimated $84 million from 2012 to 2014, he said.
"A
regulated monopoly such (Nevada Power) should not be permitted to
consistently over-earn at the expense of its captive customers," Garrett
said. "This is an important factor in MGM's decision to pursue its 704B exit application."
Contact Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801
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