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Data center firm sues Nev. PUC alleging unlawful denial of unbundling request

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Data center firm sues Nev. PUC alleging unlawful denial of unbundling request

Datacenter developer Switch suing the Public Utilities Commission of Nevada and officials for damagesin excess of $30 million, alleging discrimination in denying the company theability to seek alternative energy supplies.

ThePUC instead approveda contract that made NV Energy a middleman for more than double the priceSwitch would have paid had it been able to buy power directly from a renewableenergy provider, the complaint alleges.

Thesuit filed July 12 in the U.S. District Court of Nevada came after therevelation that thePUC's former general counsel, Carolyn Tanner, posted numerous comments onsocial media about net metering that led to her sudden departure from thecommission in June. Switch alleges it was denied equal protection under the14th Amendment of the U.S. Constitution.

Thesuit alleges Tanner, under the name "DixieRaeSparx" on social mediaaccounts, discussed Switch's unbundling case in violation of state rules ofprofessional conduct. Switch alleges that Tanner and other PUC officialscommunicated through social media during government hearings in a conspiracy todeprive Switch of its unbundling rights under state law.

"Thisis an action for wanton, reckless and intentional actions and omissions givingrise to fraud and other unlawful and unconstitutional activities perpetrated bygovernmental agencies and employees trusted by the people of the State ofNevada; such acts and omissions being condoned and led by Carolyn 'Lina'Tanner, Esq., the former General Counsel of the Public Utilities Commission,"the complaint opens.

Switchinitially applied in November 2014 to unbundle from NV Energy's electricservice so it could obtain a 100% renewable energy supply for its data centers.One in Las Vegas, when complete, will total about 2.4 million square feet andone near Reno, Nev., will total nearly 6.5 million square feet when complete.The PUC denied the application in June 2015. Concerned its contracts withalternative energy supplier FirstSolar Inc. would expire, Switch decided to pay a premium to NVEnergy to serve as a middleman and entered into a settlement agreement the PUCapproved on July 30, 2015, the complaint states.

Theagreement providedSwitch with renewable energy credits from First Solar, but at a higher costbecause NV Energy required Switch to pay a "green rider premium"above Switch's current rates to obtain the benefit of the First Solarcontracts. While NV Energy obtained the power for about 3.8 cents per kWh, theutility charged Switch 9 cents per kWh, the complaint said. As a result, Switchsaid it has sustained monetary damages in excess of $30 million.

Meanwhile,Switch noted the PUC authorizedthree casinos, Las Vegas SandsCorp., Wynn Las VegasLLC and MGM ResortsInternational, to unbundle from NV Energy and utilize interstatedirect access for their energy needs. "Switch is the only entity the PUCNhas expressly denied the ability to unbundle under Nev. Rev. Stat. 704B,"the complaint said, referring to the Nevada statute enacted in 2001 to allowlarge customers to obtain power from suppliers other than NV Energy.

Switchalso names NV Energy Senior Vice President of Government and Community AffairsTony Sanchez and NV Energy Associate General Counsel Elizabeth Elliot in itscomplaint. Tanner and Sanchez are friends on Facebook and used the social mediaplatform to communicate, Switch alleges.

Throughomissions and misrepresentations the defendants enabled NV Energy to interferewith Switch's ability to contract with First Solar so the utility could takethe contracts for itself, "thereby enabling NVE to sign the First Solarcontracts and realize the economic benefit of forcefully interjecting itself onsome of the most economically priced renewable power contracts…," thecomplaint continues.

Switchasked the court to order Tanner to preserve all evidence on Facebook, Twitter,Pinterest, Instagram and SoundCloud, saying she deactivated her Twitter accountin an attempt to destroy evidence, the suit alleges.

subsidiary NV Energy spokeswoman Jennifer Schuricht said by email, "Switchis a very important customer to NV Energy, and given how far we thought we hadcome over the past two and a half years of working with their team on a varietyof issues and opportunities, we are surprised and disappointed with this turnof events. If we are eventually served with the complaint, we will vigorouslydefend our company and our employees from baseless claims." PUC spokesmanPeter Kostes said by email, "The Public Utilities Commission of Nevada hasyet to receive service of the complaint and, therefore, has no comment at thistime." Tanner could not be reached.