Off the table: NV Energy axes merger plan amid criticism
The state’s largest utility firm, NV Energy, no longer wants to combine its two subsidiaries, more than a year after it first filed plans for the merger.
The company withdrew its application, filed with the Public Utilities Commission, last week and said sustained pushback from regulators and intervenors soured the proposal, according to NV Energy spokeswoman Katie Nannini.
“NV Energy has long stated that it believes that the merger would have delivered benefits to customers including operating efficiencies, a simplified corporate structure and combined financing activities,” Nannini said in an emailed statement. “However, intervenors and customers continued to express their concerns which ultimately led to the decision to withdraw the merger.”
A hearing on the merger proposal was scheduled for Monday.
The utility first filed plans to merge its subsidiaries — Nevada Power, which covers Southern Nevada, and Sierra Pacific Power, which covers Northern Nevada — in March 2022.
NV Energy said the merger would have allowed the company to get more favorable financing options for its debt options and projects. In its filings to the PUC, the company estimated the merger would save $4.1 million in annual costs — savings that would’ve been passed on to ratepayers — and only cost $1.1 million to implement.
“The legal merger simply results in reduced administrative costs and significant financial savings by becoming a single and larger debt issuer,” Michael Cole, NV Energy’s chief financial officer, said in filed testimony.
Outside of the financial benefits, the move would have changed the way the utility was regulated since state law governs Nevada Power differently than Sierra Pacific Power because Nevada Power serves a larger share of customers.
But NV Energy’s proposal has been met with skepticism from PUC’s regulatory staff and several intervenors, including the Southern Nevada Gaming Group, Smart Energy Alliance and Wynn Resorts Ltd.
“This joint application only identifies some potential administrative cost savings and possible financing benefits and is lacking in operational and service area considerations,” said Larry Blank, principal at consulting firm TAHOEconomics, in filed testimony on behalf of SNGG.
The Bureau of Consumer Protection also stated the merger shouldn’t go through since benefits for the public weren’t clear. It also stated the merger would mostly help the credit profile of Sierra Pacific Power, according to testimony filed on behalf of the bureau by Mark Garrett, president of Garret Group Consulting.
“(Sierra Pacific Power) has a much weaker credit profile, and it is refinancing twice as much debt as Nevada Power over the next few years,” Garrett stated. “This means Sierra will be the primary beneficiary of the debt cost savings generated by the merger, but those savings will be generated, for the most part, on the financial strength of Nevada Power.”
Nannini said now that NV Energy has withdrawn its filing, it will continue under its current structure of operating the two subsidiaries.
“This decision will not impact our current operations or financing, and we will continue to operate our day-to-day business efficiently and in the best interest of our customers,” Nannini said.
Meanwhile, NV Energy received approval from the Federal Energy Regulatory Commission for its merger.
The utility said “nothing is being considered at this time” on future plans to merge and that it had no plans to go before the Legislature to allow a merger, according to Nannini.
Contact Sean Hemmersmeier at shemmersmeier@reviewjournal.com or on Twitter @seanhemmers34.
