Switch, a publicly trade data center company, is selling electricity to its customers and should be regulated like an electric utility, according to Nevada Public Utilities Commission staff.
PUC staff is asking the commission to clarify whether Switch is a public utility, according to a March 22 petition.
Nevada allows companies that have an annual average load of at least 1 megawatt to shop for power on the wholesale market. Switch left incumbent utility NV Energy in 2016 and buys electricity from Morgan Stanley.
Las Vegas-based Switch charges for the electricity its customers use in the company’s data center as well as for electricity used to cool the space, both at a per kilowatt-hour rate, according to PUC staff.
“By engaging in such actions, staff believes that Switch is acting as a public utility in the state of Nevada, within the service territory of a certificated utility,” PUC staff said.
Switch is selling electricity at rates and under rules that haven’t been approved by the PUC, suggesting there is no consumer protection for the company’s customers, according to PUC staff.
“There is no information to suggest that the Legislature intended for the [state’s retail access] process to be utilized as a loophole or a way for large commercial customers to skirt the long-established public utility regulatory structure and begin providing public utility service without proper regulatory oversight,” PUC staff said.
Also, Switch appears to be making money off the sale of electricity, PUC staff said.
“Because Switch appears to be charging its customers at a rate that is arbitrarily higher than the competitive rate it receives from Morgan Stanley, Switch’s customers are not being protected as intended by the Legislature with respect to the rates they are being charged,” PUC staff said.
Switch’s situation appears different from exemptions from utility regulation the PUC has granted to companies selling heating and cooling services, according to PUC staff.
Switch hasn’t responded at the PUC yet, but a company spokesman defended the company.
“In seeking to name Switch as a utility, the commission staff is incorrectly trying to apply 19th century monopoly regulation to one of the most competitive industries in the 21st century, the tech industry,” the spokesman said. “No other state is trying to treat a data center as a public utility.”
Switch’s four data centers run solely on renewable energy. The company has contracted for 179 MW of solar in Nevada where it has two data centers. Switch also has a data center in Georgia and one in Michigan.
The spokesman said Switch is concerned PUC staff’s “anti-consumer action” will halt economic development efforts in Nevada and keep businesses and residents “trapped in the same old way of doing things.”
Switch is operating “in the same manner today as it was in 2016 when the PUC approved Switch’s unbundling from NV Energy,” the spokesman said.
The PUC staff filing is available here.