Fernley is moving ahead with a new electric utility aimed at bringing power to large businesses — and new revenue to the city.
The City Council voted 4-0 on Oct. 21 to approve Bill 394, creating the Fernley Power District. Councilman Albert Torres made the motion, and Councilman Ryan Hanan seconded it.
The idea is to get electricity to large businesses as much as 10 years sooner than NV Energy can supply it, with private investors paying for the system. But council members spent much of the discussion on another question: Who should be in charge?
The bill passed with the developer's requested three-member governing board for the power district. The council also directed staff to bring back an amendment proposing two additional members at a later date.
What would the district do?
The district would be a municipal electric utility, with its initial service area in the Victory Logistics District.
Its work could include generating electricity, moving it through power lines, delivering it to customers and storing it for later use.
Bob Sweetin, an attorney representing Mark IV Capital, described approximately $600 million in electric infrastructure, the plants, lines and equipment needed to provide service.
Sweetin said private investment and payments from large businesses using the power would cover those costs. The plan, as presented, would not use city money or put the expense on existing NV Energy customers.
"The real box I want to hit here [is] $0 cost to ratepayers or the city of Fernley," Sweetin said.
He explained that the ordinance is designed to prevent the district from pledging city credit or using city tax revenue or bonds without returning to the council for approval.
For residents, that is a central point: The businesses needing the new power would pay for the system serving them.
Why build a separate utility?
Timing was one of the main reasons offered.
Sweetin said a separate district could get electricity to new businesses by November 2028, compared with what he described as 2038 at the earliest through NV Energy.
"That's a decade, right?" Sweetin said. "So, you advance development, large-scale development by a decade."
For a company deciding where to build, having land is only part of the picture. It also needs enough electricity to open its doors and keep operating.
The presentation also stressed having more certainty about power prices. Long-term agreements could help businesses plan their costs over a 20-year period, while giving the city more predictable franchise fee revenue.
Those were reasons offered for moving ahead. The district still has to turn its plans into financing, contracts and a working electric system.
What could Fernley gain?
One benefit discussed was money coming into the city through a franchise fee, a payment for the utility's right to operate here.
The proposal includes a 1% fee for customers using more than 10 megawatts of power, while smaller customers would pay the city's standard franchise fee of 5%.
A megawatt is a measure of electric power. Businesses requiring more than 10 megawatts might include data centers, large manufacturing operations, distribution facilities and major cold-storage warehouses.
Sweetin said the 10-megawatt threshold was selected to distinguish large industrial electricity users from smaller commercial customers.
He estimated the franchise fee could bring Fernley approximately $3 million in its first full year of operation in 2029, increasing to about $23 million annually by 2032 if the district reaches its projected development levels.
Hanan said the potential revenue could transform the city's ability to fund public projects.
"We would have the resources to do projects that large every year at full buildout," Hanan said, referring to the approximately $20 million cost of the city's community center. "This changes the entire dynamic of the city of Fernley."
Those figures are forecasts, rather than money already available to spend. The amount would depend on how many customers arrive, how much electricity they use and how the district grows.
Who would run it?
The proposed three-member governing board drew questions from Councilman Joe Mendoza who also serves as a battalion chief at the North Lyon County Fire Department and the President of the North Lyon Firefighters Association, Local 4547.
The plan gives Mark IV Capital, the developer of Victory Logistics District, one nomination. A power-generation partner would nominate another member, and the city would nominate the third. The City Council would approve all appointments.
Mendoza asked for five members, with three city nominees and two from the private partners.
"I would like to see a five-person board with additional nominee from the city for a public utility district and maybe another nominee from other entities or stakeholders within the city," Mendoza said.
He questioned whether the proposed structure gave the private interests too much influence over a municipal utility.
"My interest is the future of the city, our constituents and not your investors," Mendoza told Sweetin.
Sweetin explained that the companies would have the right to nominate members, but the council would have the final say on appointments. Once appointed, members would serve as public officials, with obligations to the district rather than the companies that nominated them.
Attorney Paul Lipparelli, who reviewed the proposed ordinance for the city, also addressed the ethics concerns.
"These people who serve on the board after they're nominated by the various parties and after they're confirmed by the City Council will become public officers under the state ethics law," Lipparelli said.
He said the state's conflict-of-interest requirements would prevent employees with direct financial ties to the companies doing business with the district from serving on its board.
City Attorney Aaron Mouritsen acknowledged that the city had initially raised concerns about the governing structure. He pointed to the Raftelis consultant report, which concluded that limitations on the city's authority might be necessary to provide assurances to investors financing the project.
Sweetin argued that changing the board's structure during the meeting would affect the ordinance as noticed in the public record and could affect the financing arrangements being developed for the utility. He suggested approving the ordinance as presented and considering changes through a later amendment.
Hanan supported moving forward, saying the district represented a significant opportunity for Fernley. He questioned whether giving the city three seats on a five-member board would provide a fair balance for the private investors financing the infrastructure.
"I think this is a ginormous win for the city of Fernley," Hanan said.
Torres agreed that the city should continue examining the board's composition but favored establishing the district first.
"I think we're at the decision point and I think what we do is we legislate this," Torres said. "We approve it as written tonight ... and we bring it back after the new year for the amendment asking for a total of five board members."
The council ultimately voted unanimously to approve the ordinance with the three-member board. The motion also directed staff to bring back an amendment proposing two additional board members.
The work ahead will determine how the district operates, who serves on its governing board and when it can begin delivering electricity.
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