As major power consumers, casinos are always looking for ways to cut their utility bills. Some of the lessons learned by Nevada's gaming palaces (among the oldest and largest in the United States), may be useful for gambling facilities in states facing deregulation and/or power price volatility.

What Makes A Casino Different From A Theme Park?

Large facilities, such as Caesar's Palace, may each pull 20 to 30 MW, while even their smaller brethren may demand 12 MW, essentially the equivalent of a shopping mall or industrial park. When power prices jumped in Nevada in 2001, casino operators sought ways to both cut their usage and their pricing.

Steve Boss, president of the Nevada Energy Buyers Network (, has taken a leading position in assisting such customers cut their power costs, and he recently shared with me some of his perspectives on casino energy issues.

"The big difference between casinos and other entertainment facilities is the need for very high power quality and reliability due to the gaming devices, such as slot machines," he said. "Essentially, they are like PCs, in that a short power interruption can force a temporary loss of usage. The same is true for the many cash registers seen on a casino floor. In order to move as much cash as possible, casinos run 24 hours a day, every day, and they survive on averaging a few pennies out of each transaction. Any interruption immediately costs them money."

He pointed out that casinos have unusually high population densities that create high A/C and outside air loads. In Nevada, high desert temperatures further compound that demand, resulting in peaks right when power prices are highest. The always-on exterior signage (the prime driver for getting people into casinos) may pull 1 to 2 MW per casino, and extensive security cameras and systems add other 24-hour loads.

Regulatory Roulette Is Not Fun

Shortly before the California energy debacle in the summer of 2001, Nevada had scheduled its own deregulation, preceded by a built-in retail price freeze. When Western wholesale power prices spiked in 2000, Nevada Power Company, which was buying roughly half its power on the spot market, was squeezed between high costs and fixed revenues. It then sought rate increases approaching 10% to make up the difference.

The state legislature, fearing a similar problem in its own backyard, repealed its deregulation law. It left open only a narrow option: any large (1 MW or greater) power customer could seek an alternate provider if it could show that doing so did no harm to customers remaining on utility service. Boss's firm has helped several large Nevada power customers navigate that process.

The financial difficulties of power suppliers (following the Enron bankruptcy) have chastened many casino operators who, despite what one might suspect, says Boss, are quite risk averse.

What About Cutting Usage?

Up to about 2000, power costs were relatively low, so casinos had not focused on ways to cut their electric bills. When confronted by the double whammy of higher power prices and a daunting process to get lower pricing, many sought help in cutting their usage. Boss has helped casinos convert a portion of their incandescent lighting to high-efficiency fluorescent and to add VSDs to their chillers. He has found that improving energy awareness among maintenance personnel has proven especially valuable in reducing nonessential usage (e.g., cooling unoccupied conference spaces, etc.).

Lessons Learned

Boss believes that the major obstacles to moving ahead in Nevada have been the regulatory process put into place in 2001 and the financial degradation of suppliers. Combine that with a general "fear of the unknown" (so far, few deregulation successes have been seen in the United States ) and many large firms have taken a "wait and see" attitude.

Had Nevada had been less fearful, Boss says, major savings would have been possible due to a large chunk of casino load moving to alternative power providers. The economic impact analyses required prior to allowing customers to choose has shown that such transactions would be quite beneficial to other customers.

How can that be, since casinos have some of the highest load factors (in the area of 70%) among customers? Boss explained that allowing customers to buy from other providers would actually free up Nevada Power's capacity, allowing it to either shut off its most expensive generators or to buy less of the expensive spot power that caused it such problems. ES