Arguments Thursday on Giant Power Fight

LAS VEGAS (CN) — A data-storage firm and Nevada will appear in court Thursday for a hearing on Switch Ltd.'s claim that the state allowed major casinos on The Strip to stop buying electricity from the state-owned monopoly, but refused Switch's application to do so.

Las Vegas-based Switch, a Nevada LLC, sued the Public Utilities Commission of Nevada and Nevada Power dba NV Energy, on July 12 in Federal Court.

Switch wants to buy energy on the open market, rather than from the state's largest utility, NV Energy. Switch says the Public Utilities Commission refused its application, despite granting similar requests for MGM Resorts International, Wynn Resorts and Las Vegas Sands, which must pay a combined $127 million in exit fees to do so.

MGM said in May that it would pay its $86.9 million exit fee and stop buying energy from NV Energy in October.

Switch calls its founder-CEO Rob Roy "the world's leading designer, builder and operator of the award-winning SUPERNAP data centers," which store digital and electronic information.

Among its clients are Google, ebay, Intel, PayPal, MGM Resorts International, DreamWorks Animation, News Corporation, Wynn Las Vegas and Caesars Entertainment, according to the company website.

Switch says its data centers are designed to be sustainable, stay cool and protect the infrastructure and networks needed to "run the Internet."

Nevada in 2001 enacted a law allowing large firms to stop buying power from NV Energy. The Barrick Gold mine was the first to do so, in 2003, Switch says.

In 2011, Switch says, it sought "renewable energy options" from NV Energy, which ignored its requests, so it began "exploring alternative 100 percent green energy options," including through interstate commerce.

Switch says it filed a PUCN application to buy power on the open market in November 2014, negotiated with renewable energy providers, and was prepared to buy all of its energy needs via 100 percent renewable sources, including Nevada-based First Solar.

Switch says it expected to be allowed to exit its forced arrangement with NV Energy, but the PUCN denied the request in June 2015, saying: "'Switch's departure must be followed by a Switch-like customer' to hold other NV Energy customers harmless."

Switch says that "(s)uspecting unlawful and collusive behavior," it filed litigation hold letters, but the PUCN denied any obligation to comply and ignored them.

Switch filed a petition for reconsideration on June 25, 2015, and five days later reached a settlement agreement with NV Energy and the PUCN.

Switch said it had to act fast to settle the matter in order to consummate its deal with First Solar and take advantage of soon-to-expire federal tax credits to boost solar energy use.

Switch says it "had no choice but to pay a premium for the resource, permit NV Energy to interject itself as a middle man in the First Solar contracts," and settle.

After Switch settled with the PUCN and NV Energy, it says, the PUCN on Jan. 13 granted requests by MGM, Las Vegas Sands and Wynn Resorts to stop buying power from NV Energy, though they would have to pay fees totaling nearly $127 million.

Switch says it is the only entity the PUCN refused to allow to leave NV Energy, and estimates it would have to pay a $27 million exit fee if given the same ruling as the casino owners.

Switch also says an attorney who recently worked as general counsel for the PUCN created an online persona and posted comments about the legal matters before the PUCN and exhibited a bias against the solar industry.

Switch asks the court to enjoin the PUCN et al. from destroying evidence related to the case, including social media accounts; to preserve, retain and deliver the evidence to Switch; and to void the settlement agreement among Switch, NV Energy and the PUCN.

It also seeks $31 million in damages and legal costs, plus damages and reimbursement for money overpaid to NV Energy as the "injected middleman" between Switch and First Solar, for fraud, conspiracy, deceptive trade, interference with economic advantage and contractual relations, civil rights violations, and negligence.

Switch is represented by Samuel Castor in Las Vegas.

Switch and the PUCN are to argue Switch's motion for a preliminary injunction at 11 a.m. Thursday.

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