Buffett's Nevada Utility Offers One Customer Millions to Stay

(Bloomberg) -- Warren Buffett’s utility NV Energy Inc. holds a near monopoly in Nevada, yet wants to give millions of dollars to a school district as an incentive to stick with the company.

The Clark County School District’s Board of Trustees will vote Thursday on NV Energy’s offer, school district superintendent Jesus F. Jara said in an interview. If approved, the company will pay $1.5 million a year through 2023.

In return, the school district -- which pays an energy bill of about $45 million a year -- will remain a customer for the period and won’t seek to “receive electric service from an alternative energy provider,” according to the proposal.

The potential deal is a sign of how eager utilities are to hold onto big customers, as power providers across the U.S. grapple with increased competition from newer, cleaner and cheaper forms of energy as well as more demanding and environmentally conscious customers.

“We were looking at ways to get savings on our bill,” Jara said. “They came to the table with $1.5 million. This will be a kickstarter for us to look at other ways to save on energy costs.”

A spokeswoman for NV Energy, Jennifer Schuricht, said the company was responding to customer demand. “By doing so, we continue to have the opportunity to serve our largest customers and by retaining them, actually protect other customers from potential cost increases,” she said in an email. The school district will continue to pay its normal rate established by the Public Utilities Commission of Nevada, she said.

Rejected Measure

Last year, Nevada voters rejected a ballot measure backed by casino owner Sheldon Adelson to allow customers to choose their own electricity. It would have forced NV Energy, owned by Buffett’s Berkshire Hathaway Inc., to open its retail business to competition and potentially sell power plants.

Though the measure failed, NV Energy is still trying to retain customers. The company has made at least one other deal with a large entity that involves cash payments in exchange for remaining a customer of the utility. The city of Henderson will receive an annual payment of $250,000 for five years, according to city council meeting minutes.

In 2017, a group of tech firms including Adobe Systems Inc. pressed Dominion Energy Inc. for more renewables in Virginia -- a hot spot for data centers -- noting that the companies represent the utility’s biggest source of future demand growth. Less than a month later, Dominion agreed to add clean power for a new Facebook data center, paving a potential path for others.

“A recent push from customers around the U.S. to gain more flexibility in their electricity procurement, as well the option to purchase cleaner sources of electricity, has jeopardized the business model of many utilities,’ said Kyle Harrison, an analyst at BloombergNEF.

To contact the reporter on this story: Millicent Dent in New York at mdent13@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Pratish Narayanan, Joe Ryan

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