TL;DR · 30-second read
The Short Version
Nevada’s main electric company, NV Energy, is suing Tract, a company that builds huge campuses for data centers. Data centers are the warehouse-sized buildings full of computers that run websites, apps and artificial intelligence.
The fight is over who gets electricity first, how much, and who pays for new power plants and lines. Requests for new power, driven largely by data centers, already add up to more than twice what the utility’s whole system uses on its busiest day.
The utility says households could get stuck with the bill. Tract says it has promised nearly $1 billion toward the utility’s equipment and is paying its fair share.
NV Energy, Nevada’s primary electric utility, has sued data center developer Tract in Washoe County’s Second Judicial District Court, The Nevada Independent reported on July 28, 2026. The complaint was filed Friday, July 24, and much of it is redacted because it was filed under seal. It alleges that Tract started private arbitration over when and how much power the utility must provide to its Peru Shelf and South Valley projects at the Tahoe Reno Industrial Center, and that this bypasses the Public Utilities Commission of Nevada (PUCN).
NV Energy says Tract’s demands would shift infrastructure and energy costs onto existing customers. Tract says the complaint “seriously misstates the issues, the facts, and the contracts NV Energy signed.” It also says it has never sought subsidies, that it has committed nearly $1 billion to support NV Energy’s infrastructure, and that those contracts commit the dispute to arbitration.
Executive Summary
The suit pits Nevada’s dominant utility against one of the largest landholders in the state’s data center market. It turns on a question every fast-growing power market will eventually face: when a developer’s contract and a utility’s regulated resource plan collide, who decides the order in which new loads get electricity? NV Energy says only the PUCN can. Tract says the parties agreed to arbitrate.
The backdrop explains the stakes. NV Energy’s latest integrated resource plan says it would need about 22 gigawatts (GW) just to serve existing requests for service, more than twice its current system peak, and it attributes that demand largely to data centers. When the grid is oversubscribed by that margin, a place in the queue has real economic value. Tract is already planning 362 megawatts (MW) of temporary gas and diesel generation because the grid cannot serve its projects right away.
For ratepayers, the dispute is about who pays for growth. For developers and their financiers, it tests whether a large-load contract signed with a utility can be enforced on its own terms, or whether it stays subordinate to the regulator’s planning process.
Twice the Peak: Why Queue Position Is Now the Prize
NV Energy’s most recent integrated resource plan (IRP) says the utility would need roughly 22 GW of capacity just to meet requests for service already on file. That is more than twice the current system’s peak demand, and the utility says data centers are the main driver. A gigawatt is a thousand megawatts, and a single megawatt is a large industrial load on its own. When requests exceed what the grid can deliver by that much, the utility cannot connect everyone at once. The order of service then decides whether a campus opens on schedule, and it matters as much as the price of power.
That order is exactly what this dispute concerns. According to the complaint, Tract’s arbitration seeks to settle when and how much power NV Energy should provide, how the utility generates and buys that power, and the priority of service among customers in its queue. Tract’s own contingency plan shows what a later place in line costs. NV Energy cannot serve the projects immediately, so Tract has proposed temporary natural gas and diesel plants: 144 MW for South Valley and 218 MW at Peru Ridge. These would be “behind-the-meter,” meaning on-site generation that feeds the campus directly rather than power drawn from the utility’s regulated grid.
Three groups are affected. Other large customers in the queue are affected because capacity promised to one developer is capacity another does not get on that date. Existing ratepayers are affected if accelerated grid upgrades end up in general rates. Developers and their lenders are affected because a campus’s value depends heavily on when it can be energised. With that much at stake, both sides have escalated. Tract has gone to arbitration, and NV Energy has gone to court to stop the arbitration from deciding matters it says belong to the regulator.
Contract Forum Versus Regulatory Forum
NV Energy’s legal theory rests on jurisdiction. Generation, power purchasing and service priority are set through IRPs, which the utility must file with the PUCN and have approved at least every three years. The utility argues that an arbitrator cannot decide those questions outside that framework, especially while the Commission is weighing the same issues. That includes NV Energy’s proposal for a uniform large-load service agreement meant to standardise terms across data center customers. “Defendants cannot now short-circuit that regulatory process,” the filing says.
Tract’s position rests on contract. It says the agreements NV Energy negotiated commit disputes to arbitration, and that it simply wants the utility “to live up to the commitments it made.” The agreements were executed under Rule 9, which governs how construction costs and responsibility are split between the utility and a new customer, weighing the project’s size, duration and risk. NV Energy says Rule 9 does not address the supply of electricity. The unresolved question is therefore whether the utility made supply or timing commitments in those contracts, and if it did, whether they can be enforced privately. With the agreements sealed, neither side’s reading can yet be checked publicly.
The implications reach beyond Nevada. If construction-cost agreements can carry enforceable supply priority through arbitration, large-load contracts become a channel that runs parallel to resource planning. If they cannot, developers get less contractual certainty at the moment they are raising capital for multi-hundred-megawatt campuses. Either outcome carries costs for someone.
Same Principle, Different Math
Both parties invoke the same principle. “Customers that create new costs should cover new costs, and those costs should not be shifted,” said a person familiar with the matter. Tract says it “has committed to paying our fair share for infrastructure and generation needs” and never asked to be subsidised. The disagreement is not about whether growth should pay for itself. It is about what a fair share amounts to, and what the nearly $1 billion Tract cites actually buys in capacity, timing and priority.
The growth figures explain why that math is contested now. NV Energy estimates it needs 52 percent more energy statewide than it forecast only two years ago. Data centers account for about 5 percent of its sales today, and the utility projects that share will reach 64 percent by 2046. On that trajectory, cost-allocation rules written now will govern who pays for most of the system’s future expansion. Questions that are traditionally settled in rate cases and resource plans are here being argued in court over the terms of a contract. That is one case, not yet a pattern, but it is a sign of how much weight these contracts now carry. The lawsuit also places the utility’s stated position near local concerns about data center electricity and water use, a shift in public posture for a utility that is simultaneously planning to serve that load.
Land Is Not Power
Tract has assembled more than 12,000 acres in Northern Nevada, including 1,060 acres in Lyon County that it says can support 1.6 GW of data center capacity. Land has not been the constraint, and grid access keeps proving to be one. Last year, Switch sued Tract to block certain developments on the same Peru Shelf parcels, arguing they would affect Switch’s ability to connect future projects to utilities. The court ruled in Tract’s favour. Two separate lawsuits over the same ground have now turned on access to power.
For site selectors, investors and tenants, the practical lesson is that acreage, zoning and even signed construction agreements do not establish an energisation date. On-site gas and diesel generation is becoming part of the plan rather than an emergency fallback. That brings its own permitting, fuel and emissions questions, and it does not settle when the grid will take over.
Background
NV Energy is Nevada’s primary electric utility and a subsidiary of Berkshire Hathaway Energy. Like other regulated utilities, it plans new generation and power purchases through integrated resource plans filed with and approved by the PUCN at least every three years. It already has large-load agreements with multiple data centers. In its current plan it is asking regulators to approve a uniform service agreement for large-load customers, consistent with those existing contracts.
Tract develops master-planned data center parks and has bought more than 12,000 acres across Northern Nevada. In 2024 it acquired 8,600 acres in Storey County between the Tahoe Reno Industrial Center (TRIC) and the Virginia City Highlands, bringing its holdings to 11,000 acres. It later added 1,060 acres in Lyon County just south of TRIC, which it says can support 1.6 GW of capacity. Last year Tract prevailed in a lawsuit brought by Switch, a longtime TRIC operator, over development of Tract’s Peru Shelf parcels. Source: Nevada’s electric utility is suing a major data center company. Here’s why. (The Nevada Independent), on NV Energy’s lawsuit challenging Tract’s arbitration over power-supply agreements for two Storey County data center projects.Sources