Illustrative Case: Large Nevada Cultivator Evaluates NRS 704B Exit from NV Energy

The facility and starting situation

Assume a dual-license cultivation and production campus in unincorporated Clark County on a single Nevada Power account [nve-south-commercial-rates]. The operator holds both adult-use and medical licenses under the Nevada Cannabis Compliance Board program, consistent with the pattern where most establishments run a single product stream [ccb-active-license-list]. Nevada counted 103 licensed cultivators on the CCB active list dated September 1, 2026 [ccb-active-license-list].

The campus spans three buildings on one parcel: 55,000 square feet of flowering canopy, 12,000 square feet of veg, a 6,000-square-foot mother wing, and a 4,000-square-foot extraction wing with chillers. LED lighting runs at an assumed 38 watts per square foot in flower and 28 W in veg. Clark County's desert climate drives long cooling seasons: Nevada statewide normals average 2,166 cooling degree days per year [noaa-cag-nevada], and sealed rooms still generate transpiration moisture even when outside humidity is low.

Interval data for calendar year 2025 showed a measured summer peak of 920 kW in July and a winter peak of 710 kW in January. The twelve-month average load was 780 kW, below the 1 MW threshold in NRS 704B.080 [nrs-704b]. The account sat on Nevada Power schedule LGS-2, which covers billing demand from 300 kW to 999 kW [nve-south-commercial-rates]. Supply and delivery were bundled through NV Energy. The CFO had read about MGM Resorts and Wynn leaving bundled service under 704B and wanted the same analysis before signing a campus expansion loan [utility-dive-nv-choice].

Nevada voters rejected the broader Energy Choice Initiative in November 2018 by more than 67 percent after approving it in 2016, so 704B remains the only exit path [nv-independent-q3-2018]. There is no ISO or RTO in Nevada; NV Energy participates in the CAISO Western Energy Imbalance Market but does not offer an organized capacity market to retail customers [pucn-electric].

What the baseline bills showed

The table mixes cited tariff rates with assumed usage. Only rates and statutory thresholds are facts; kWh, kW, and dollar totals are inputs for this example.

Line item	Assumption or rate	Monthly (summer)	Monthly (winter)	Notes
Flower lighting	550 kW on 12 h/day	200,750 kWh	200,750 kWh	Assumed load
Veg and mother	65 kW on 18 h/day	35,585 kWh	35,585 kWh	Assumed load
HVAC and dehumid	240 kW summer / 150 kW winter avg	172,800 kWh	108,000 kWh	Assumed load
Extraction chillers	45 kW on 16 h/day	21,600 kWh	21,600 kWh	Assumed load
Measured peak demand	920 kW / 710 kW	920 kW	710 kW	Sets LGS-2 class
Facilities charge	$4.60 per kW, LGS-2 [nve-south-commercial-rates]	$4,232	$3,266	Delivery
Demand charge	$5.48 per kW, LGS-2 [nve-south-commercial-rates]	$5,042	$3,891	Delivery
Bundled energy	Modeled 10.2 cents per kWh all-in	~$44,500	~$37,200	Includes DEAA true-up
Approximate total		~$98,000	~$81,000	Excludes taxes

Annualized delivery demand and facilities charges on a 920 kW summer peak were roughly $108,000 across four summer months plus lower winter months. At the EIA June 2026 Nevada industrial average of 10.16 cents per kWh on about 4.6 million kWh, the all-in spend tracked close to $470,000 a year [eia-epm-5-6-a]. That was below the US commercial average of 14.19 cents in the same period [eia-epm-5-6-a], but the per-kW delivery lines still dominated the CFO's attention because they could not be negotiated away on bundled service.

The 704B analysis

The operator hired counsel and an energy advisor to run a formal exit study in January 2026, inside the statutory filing window of January 2 through February 1 [nrs-704b].

Eligibility gate. NRS 704B.080 defines an eligible customer as commercial, industrial, or governmental with average annual load of 1 MW or more [nrs-704b]. The campus averaged 780 kW. A planned fourth flowering building would add an assumed 180 kW to average load, bringing the modeled average to 960 kW, still short of 1 MW. Stacking two meters on one campus does not combine loads unless each meter independently qualifies; this campus had one service entrance. The application would be denied on eligibility alone unless the operator deferred expansion or added a separate 1 MW-plus load, such as a co-located data hall, which the cannabis regulator would not permit on the same license footprint.

Impact fee exposure. Even for customers above 1 MW, the PUCN may condition approval on an impact fee covering the customer's share of unrecovered deferred energy balances and other utility obligations [nrs-704b]. Casino exits under 704B carried large fees in public dockets; the operator's advisor modeled a fee range of $2 million to $8 million based on those precedents, with the wide band reflecting case-by-case PUCN discretion [utility-dive-nv-choice]. The Commission must act within 210 days or the application is deemed denied [nrs-704b].

Distribution-only economics. A 704B customer buys energy from a provider of new electric resources and takes distribution-only service from NV Energy [nrs-704b]. Generation might save 0.5 to 1.5 cents per kWh in a favorable wholesale market, but the customer still pays transmission, distribution, metering, and any impact fee. Nevada's bundled industrial rate already averaged 10.16 cents per kWh [eia-epm-5-6-a]. After adding distribution-only tariffs and amortizing a mid-range impact fee over ten years, the model showed no net savings until year seven, and only if wholesale prices stayed flat. AB 452 (2025) directs the PUCN to study fuel-cost sharing mechanisms, adding regulatory uncertainty to any long-term exit [pucn-electric].

Timing risk. A successful application filed February 1, 2026 could not start purchases until at least 280 days later, roughly November 2026 [nrs-704b]. Missing the window pushes the earliest start to late 2027. The expansion loan covenants required a finalized energy cost structure by June 2026.

The board voted unanimously to stay on bundled NV Energy and pursue demand-side options instead.

What changed on bundled service

Three interventions ran in parallel without leaving NV Energy.

Optional TOU rate election. Nevada Power offers OLGS-1-TOU and related schedules that concentrate the demand charge in a summer on-peak window from June 1 through September 30, 3:01 p.m. to 9 p.m. daily [nve-south-commercial-rates]. The operator shifted two flower blocks to a 9 p.m. to 9 a.m. photoperiod so lighting ramps fell outside the on-peak window. Summer measured peak demand fell from 920 kW to 780 kW because HVAC and dehumidification no longer stacked with lighting at 4 p.m. See peak demand vs. peak usage for why interval shape matters on TOU schedules.

Battery feasibility study. NV Energy's PowerShift storage incentive pays $0.32 to $0.55 per watt-hour for systems under 100 kW on non-TOU rates, with higher tiers for TOU customers, capped at 50 percent of installed cost or $50,000 [nve-storage-incentive]. A 250 kW / 500 kWh system could shave 150 kW from the on-peak window. The operator applied for the incentive but deferred purchase until the TOU shift showed two months of stable peaks.

Deferred Energy Accounting Adjustment review. Bundled NV Energy rates carry a DEAA that trues up fuel and purchased-power costs [nve-south-commercial-rates]. The CFO built a monthly accrual for DEAA swings instead of treating bundled energy as a fixed input, which improved lender reporting even without a 704B exit.

The math after TOU shift

Assume the photoperiod change cut summer peak demand from 920 kW to 780 kW while winter peak held at 710 kW. The account remained on LGS-2.

Line item	Before (summer month)	After (summer month)	Change
Peak demand	920 kW	780 kW	−140 kW
Facilities + demand charge	$9,274	$7,862	−$1,412
Annual delivery demand/facilities	~$108,000	~$95,000	~−$13,000
Bundled energy (same rate)	~$44,500	~$44,500	Flat kWh
Modeled annual all-in	~$470,000	~$457,000	~−$13,000

The savings came entirely from delivery demand charges, not from supplier shopping. At 780 kW average load, 704B remained unavailable [nrs-704b]. The modeled annual savings of $13,000 was less than one quarter of the lowest impact fee scenario in the exit study.

What did not work

Combining meters with a neighboring warehouse. The operator explored whether a adjacent cold-storage warehouse on a separate account could aggregate load for 704B eligibility. NRS 704B applications are per customer account, not per landlord parcel, and the warehouse owner declined.

Waiting for retail choice. Question 3 would have opened a general market by July 2023 but failed at the ballot in 2018 [nv-independent-q3-2018]. No newer statewide choice mechanism appeared in the 2023 or 2025 legislative sessions covered in the Nevada data file.

Flat-rate LGS-2 without TOU. Staying on non-TOU LGS-2 kept the same $5.48 per kW demand charge year-round [nve-south-commercial-rates]. Night photoperiods alone did not reduce peak kW without the TOU window definition.

PowerShift custom LED rebate for flower rooms. NV Energy's Business Energy Services program lists no horticulture-specific prescriptive measure; grow lighting would require the custom track with verified savings [nve-south-commercial-rates]. The operator already ran DLC-listed LEDs and did not qualify for a meaningful custom incentive.

Lessons that transfer to other Nevada cultivators

Run the 704B eligibility math before you hire exit counsel. Average annual load must reach 1 MW, not just a summer interval peak [nrs-704b]. Model impact fees as a first-class cost; casino precedents show they can exceed a decade of supply savings [utility-dive-nv-choice]. Respect the January 2 to February 1 filing window and the 280-day lead time [nrs-704b]. On bundled service, summer on-peak TOU demand is the lever most cultivators can actually pull [nve-south-commercial-rates]. Storage incentives pay more on TOU rates and can compound a photoperiod shift [nve-storage-incentive]. Confirm any expansion plan against the 1 MW threshold before you finance new rooms. See demand charges explained, the Nevada switching guide, and cultivation facility energy in Nevada.