Nevada's electric utility is suing a major data center company. Here's why.

NV Energy has filed a lawsuit in Washoe County's Second Judicial District Court against Tract, a major data center development company with extensive land holdings across Northern Nevada. The utility alleges that Tract is attempting to subvert the normal regulatory process managed by the Public Utilities Commission of Nevada (PUCN) by initiating private arbitration over the provision and cost of power. NV Energy claims Tract seeks to have the utility reserve and provide massive amounts of power for its private developments, specifically the Peru Shelf and South Valley data center projects in the Tahoe Reno Industrial Center in Storey County, while shifting the associated infrastructure and energy costs onto Nevada families, small businesses, and existing customers.

The lawsuit states that addressing these issues through arbitration would keep them hidden from state energy regulators and the public, bypassing the comprehensive integrated resource plans (IRPs) that dictate how NV Energy generates and purchases power and prioritizes service. The utility estimates it needs 52 percent more energy statewide than forecast two years ago, primarily due to data center demand, which is projected to account for 64 percent of its sales by 2046.

To meet immediate power needs for its projects, Tract has proposed constructing temporary natural gas and diesel power plants (144 MW for South Valley, 218 MW for Peru Ridge). NV Energy is concerned these "behind-the-meter" plants could skirt state regulatory processes. The utility has positioned itself alongside growing public opposition to data centers, which often centers on concerns about water and electricity overuse. This is not Tract's first legal dispute in Northern Nevada; a previous lawsuit with data center operator Switch, concerning land use on Peru Shelf parcels, was ruled in Tract's favor last year.