By Jason Hidalgo, Reno Gazette Journal
Lake Tahoe finds itself in the middle of the national debate about the rising energy demand from data centers as a utility company scrambles to secure an alternate power source.
About 49,000 customers in the Lake Tahoe region face the prospect of losing their primary source for power next year after Nevada-based utility company NV Energy declined to extend an agreement to supply energy to Liberty Utilities.
Liberty Utilities, a subsidiary of Canada-based Algonquin Power & Utilities Corp., gets the bulk of the energy it provides Lake Tahoe from the Nevada utility.
Liberty Utilities’ 12-month rolling peak load for the Lake Tahoe Region is about 634,000 megawatt hours. It generates 27% of that — 173,000 megawatt hours — through its Luning and Turquoise solar facilities in Nevada. The remaining 73% comes from NV Energy.
Liberty Utilities noted the impending loss of NV Energy as a supplier in a letter to the California Public Utilities Commission (CPUC) on March 6, requesting to expedite the search for potential new energy partners.
“Unfortunately, NV Energy, citing its own resource needs, declined to extend the full-services arrangement,” Liberty Utilities wrote. “Accordingly, Liberty must now take expedited steps to replace the prior arrangement.”
So how did data centers enter the picture? Liberty Utilities noted the market circumstances faced by NV Energy, particularly in Northern Nevada.
“The market for new resources is extremely competitive as a number of entities are seeking to add large loads such as data centers into the area,” Liberty wrote.
The NV Energy and Liberty agreement explained
The single line from Liberty’s letter has since added more fuel to the heated national discussion about data centers, which are now being blamed for NV Energy’s decision to decline an extension of its deal with Liberty Utilities.
NV Energy itself says the energy demands from new projects have increased significantly.
Jeff Brigger, vice president of business development and programs for NV Energy, compared dealing with the high energy load of today’s data centers to the time when the utility was cutting its teeth and scaling up to meet the high demands of Nevada’s mining industry.
Brigger made the comparison while speaking at an event hosted last year by commercial real estate development association NAIOP in Las Vegas.
“In most cases, the (energy) asks now are getting tremendous,” Brigger said.
“It wasn’t more than three, four, five years ago when we had data center customers coming to us and say, we want to build a facility for 100 megawatts, and at that time, that’s a pretty big load, right?” Brigger added.
“We are now having customers that come to us and ask us for 1,000 megawatts at a clip.”
NV Energy has about 22,000 megawatts of requested load in its queue, according to Brigger. The number represents capacity proposals and not commitments, according to NV Energy.
For context, NV Energy served approximately 385 megawatts of data center load in 2025, with total peak demand reaching about 8,500 megawatts.
The circumstances surrounding the deal between NV Energy and Liberty Utilities, however, are much more nuanced and can’t be attributed to data centers alone.
The original agreement between the two utilities actually precedes the start of the AI boom in 2022 — which is what kicked off the current spike in demand for data centers.
The origins of the deal between the two utilities can be traced back nearly two decades to 2009, when NV Energy sold its electric utility assets in California to Liberty Utilities so it can focus on its core Nevada business.
The history of Liberty Utilities’ assets in the Lake Tahoe region explains why it gets power from Nevada and why it isn’t connected to the California grid. Ideally, Liberty should build its own infrastructure to connect to the California grid directly but that would take a lot of time and money, the utility said.
“A large transmission line west, further into California over the Sierras, would be needed,” Liberty Utilities said in a statement. “Such a project would require a significant investment with environmental and other notable considerations.”
To help Liberty Utilities with its transition, NV Energy agreed to temporarily provide it with energy for five years. The agreement was extended twice — first in 2015 and again in 2020.
The extensions were provided under the expectation that Liberty Utilities was working on getting alternate sources of energy, according to NV Energy.
“From the beginning, it has been understood that Liberty Utilities would eventually secure its own transmission access and energy supply so it could serve customers independently,” said Katie Nanini, an NV Energy spokesperson.
“Liberty’s 2018 request for transmission service signaled that it was taking the steps necessary to arrange for and deliver energy to its customers, and NV Energy’s planning has consistently reflected that expectation.”
Liberty Utilities, however, only recently filed its request with the CPUC earlier this year for an expedited search of a new supplier.
“In March 2026, Liberty filed with the CPUC to begin the selection process for new energy sources,” said Alison Vai, Liberty Utilities spokesperson, via e-mail.
“We expect to issue a formal request for proposals this summer, prioritizing options that uphold customer affordability and renewable options.”
Power to Lake Tahoe customers will not be cut off
If the CPUC approves Liberty’s expedited request, the utility will start its formal bidding process for potential energy suppliers this summer.
Liberty then expects to make its selection later this year or in early 2027, with the official transition to its new supplier occurring at the start of 2028.
Liberty acknowledged one key concern about the transition, which is whether rates will potentially go up.
“While no utility can predict the exact future cost of energy, affordability is a primary goal in this search,” Liberty said in a statement. “With a competitive bidding process, we aim to find a cost-effective solution for your monthly bill.”
In response, NV Energy welcomed Liberty Utilities’ efforts to find a new energy partner.
“We appreciate that Liberty has now taken the next step by asking the California Public Utilities Commission to update its resource plan so it can secure the energy needed to serve its customers going forward,” Nanini said.
Regardless of what happens, Liberty Utilities still plans to work with NV Energy. Instead of building its own transmission line network to connect to its future supplier, Liberty will use NV Energy’s Greenlink West transmission project, which is expected to come online in 2027.
In its letter to the CPUC, Liberty also noted that NV Energy will continue to supply energy to Liberty’s Tahoe customers until May 2027 or when the Greenlink line becomes operational, whichever happens later.
This means Tahoe ratepayers are guaranteed to receive electricity and not just have their power cut off. NV Energy also confirmed with the Reno Gazette Journal on Thursday afternoon that it will continue to supply power to Liberty Utilities until it completes its transition.
The main issue, however, is not whether power will be cut off for Lake Tahoe customers, according to energy advocacy group Tahoe Spark. It’s how much those customers are going to pay once the transition is complete.
While Liberty declines to provide estimates, Tahoe Spark CEO Danielle Hughes is forecasting the new rate to come in at 60 cents per kilowatt hour based on modeling the organization has done with an energy consultant.
The rate would be more than three times the national average, which was at 17.65 cents per kilowatt hour in February, according to the U.S. Energy Information Administration. It would also be nearly double California’s average rate of 33.22 cents per kilowatt hour.
“We will likely be the highest rate in the country,” Hughes said.
Hughes also accused utility companies of passing off the impact of rising costs from power-hungry facilities such as data centers to consumers.
NV Energy, however, pushed back on such claims, saying that its general policy is that “growth will pay for growth.”
Brigger pointed to examples where NV Energy makes sure to get long-term commitments signed by high-load customers for projects such as a Google data center or Allegiant Stadium when it has to scale up capacity to meet their higher energy requirements.
“We are working on agreements … where the network upgrades that we would otherwise build that kind of benefit everybody as we build out for these types of projects will be paid for up front by the (high-load) customer,” Brigger said.
“That protects us and our existing customers to make sure that those investments will be used to the fullest extent for what we build them for.”
NV Energy also stressed that it will not be involved in setting rates for Lake Tahoe customers because it will not be providing the energy. Instead, the Greenlink project will only serve as a transmission line.
Meanwhile, the prospect of Lake Tahoe customers potentially paying astronomically high rates has pushed the Sierra Club to join Tahoe Spark in requesting more transparency from the CPUC regarding Liberty Utilities’ energy transition process for Lake Tahoe customers.
Transparency is especially important for smaller communities that normally do not have as much of a say when it comes to crafting energy rates and policy, Hughes added.
“It’s scary what they’re doing across the country, especially in smaller rural communities that have no voice,” Hughes said. “It’s terrifying and they need to slow it down.”
USA TODAY Network via Reuters Connect
