The Fernley City Council is scheduled to consider a proposed ordinance at next week’s meeting that would establish a municipal utility district to serve customers within the Victory Logistics District.
The council heard the first reading of the proposed ordinance May 20, and it will return for a second reading at the June 17 meeting.
According to the proposed ordinance, the estimated costs of forming the Fernley Power District would be paid by Mark IV Capital and its partner, Stella Power Company.
The ordinance also states that the estimated $600 million cost of constructing the power plant would be funded entirely by the developers.
Because the district’s only customers would be located within the Victory Logistics District, the proposal states that customers served by NV Energy would not see an increase in their rates.
Instead, a staff report on the item estimates the district would generate nearly $24 million annually in revenue for the city through franchise fees.
Councilman Joe Mendoza asked who would establish the franchise-fee rates and how the projected revenue was calculated.
Attorney Bob Sweetin, representing Mark IV Capital, said the estimates are required by state law and were calculated using current market rates as a baseline.
He added that if the district is created, its board of directors would ultimately determine those rates.
“The demand is very high for electricity right now,” Sweetin said. “And so what the end-use off taker, whether that be advanced manufacturing or a data center, what they're willing to pay ultimately for that power, and for the speed to power that the Fernley Power District would offer, that's what would set that rate, which could be subject to change.”
Mendoza also questioned whether the city could be leaving potential revenue on the table.
Sweetin responded that once the district is formed, the power district board would become the regulatory authority and franchise agreements could then be finalized.
“I would submit, the $24 million estimate, if we built nothing, 100% of nothing is zero, but a franchise agreement on a long-term 20-year power purchase agreement is additional funds that would not be necessarily leaving money on a table,” he said.
Because the May 20 agenda item was only the first reading of the ordinance, no action was taken.
If the ordinance is approved, construction of the power plant would still require a conditional use permit.
Councilwoman Felicity Zoberski requested that the conditional use permit be brought before the City Council before consideration by the Planning Commission, which is the body that makes final determinations on such applications.
City Attorney Aaron Mouritsen said there is a 10-day appeal period after Planning Commission action during which the council may request that the item be brought forward for review.
At previous meetings, representatives of Mark IV Capital said the proposed power plant and utility district are necessary because NV Energy is not expected to provide the level of electrical capacity needed within the Victory Logistics District for several years.
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