Wynn And MGM Resorts Cut Ties With NV Energy

Starting this week, two of the biggest casino operators in Nevada are shifting to an alternate power source and reducing their reliability on NV Energy, the local power utility. Wynn Resorts and MGM Resorts which control over 15 properties on the Strip have decided to cut ties with NV Energy and will move to alternate providers as a result of a year long program planned towards making the shift from having complete reliance on NV Energy to private providers.

Erik Hansen, the director of energy procurement for Wynn Resorts said despite the underlying change there will be no difference in terms of reliability or functionality for patrons to the casino properties on the strip.

The exit of these two groups as customers of NV Energy will have a substantial impact on its electricity sales. The two companies together account for around 6 percent of NV Energy’s total base. To compensate for this loss and not cause higher rates for individual customers a total of $100 million will be paid by them as impact fees, with MGM paying the bulk of it at $87 million.

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The Public Utilities Commission will be assessing recurring charges to be levied for a period of six years as an additional protection for the public. Despite this, Wynn and MGM believe that the move will benefit their businesses as it will enable them to buy power at prices reflecting current market rates.

In a statement, Cindy Ortega MGM’s senior vice president and chief sustainability officer said,

It’s part of being able to control what your supply looks like and be able to take advantage of opportunities without have a third-party as an intermediary. Innovation and technological advancement is faster than regulations and monopolies can usually move.

MGM is also exploring the option of generating power from renewable sources. Ortega said contracts with large solar power plants are possible and the company will continue investing in renewable sources across the state. MGM already gets some solar power from its solar array located on the rooftop of its Mandalay Bay casino.

The withdrawal of the casinos has been a complex and carefully coordinated program ever since the utility company gave approval in January for both companies to exit its grid. Even with this, MGM estimates that it will be several months before it completely stops using NV Energy’s services. NV Energy will continue to provide backup services to ensure reliability but will not be selling energy to the casinos any more.

Hansen said that energy forms a significant component of a casino’s costs and several other casinos will soon start exploring similar cost-saving programs for procuring energy.

Adrian Sterne

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