Nearly 50,000 Lake Tahoe residents have to find a new power source after their energy source looks to redirect lines to data centers

Lake Tahoe doesn’t know where its power will come from after next ski season—and it’s a major problem for the 49,000 residents who call the region home.

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The Sierra Nevada tourist hub—home to ski resorts, lakeside casinos, and roughly 25 to 28 million annual visitors—is facing an energy crisis with a familiar culprit: the data centers powering the AI boom.

NV Energy, the Nevada utility that has supplied the bulk of Lake Tahoe’s electricity for decades, told Liberty Utilities—the small California company that services the region—that it will stop providing power after May 2027. The reason? NV Energy needs the capacity for data centers. As in: the energy supplier for the Lake Tahoe region is telling the utility company that it has less than a year to find another power source.

Northern Nevada has become one of the fastest-growing data-center corridors in the country. Google, Apple, and Microsoft have either built or are planning facilities around the Tahoe-Reno Industrial Center east of Reno. The Desert Research Institute, using data from NV Energy’s 2024 Integrated Resource Plan, found that the 12 data center projects located overwhelmingly in Northern Nevada could drive 5,900 megawatts of new demand by 2033. At a regional business event last fall, NV Energy’s director of business development called the moment “unprecedented,” saying the company was eager to serve the new industrial load but that it would not “impact our existing customer base.”

But Liberty’s 49,000 California customers may already be bearing the cost. Liberty Utilities generates about 25% of its power from solar facilities it owns in Nevada. The other 75% comes from NV Energy, and that source will no longer be supplied to the region by this time next year.

“It’s like we don’t exist,” Danielle Hughes told Fortune. Hughes is a North Lake Tahoe resident, CEO of the nonprofit Tahoe Spark, and a supervisor within the California Energy Commission’s Efficiency Division.

A jurisdictional knot with no easy fix

What makes Tahoe’s crisis so difficult is that no single regulator oversees the entire chain from power generation to customer bills.

Liberty is a California investor-owned utility. Its customers live in California and pay rates approved by the California Public Utilities Commission. But Liberty’s grid sits inside NV Energy’s balancing authority, connects to NV Energy at 38 points, and relies entirely on Nevada transmission lines, according to a Liberty filing with state regulators. Liberty’s territory is a small sliver along California’s eastern border, sitting within NV Energy’s balancing zone rather than the California Independent System Operator, which coordinates the grid for virtually every other ratepayer in the state.

Building a direct connection to California’s grid would require a new transmission line west over the Sierra, a project Liberty President Eric Schwarzrock said would cost “hundreds of millions of dollars” with significant land impacts.

The CPUC approves Liberty’s rates and procurement requests, but it cannot order NV Energy to keep selling wholesale power or dictate how Nevada plans for data centers. That falls to the Federal Energy Regulatory Commission, which regulates interstate transmission and wholesale electricity sales. With NV Energy and Nevada regulators controlling the upstream grid, the result is a system where California sets the rules, Nevada runs the wires, federal jurisdiction applies to the wholesale market, and no single entity is accountable for the outcome.

In March 2026, Liberty asked the CPUC to authorize an expedited request for proposals for replacement energy beginning June 1, 2027. In that filing, Liberty said NV Energy had cited data centers in the Tahoe-Reno Industrial Center area and northern Nevada transmission constraints, among other reasons, for ending full-requirements service.

Hughes and the Sierra Club’s Tahoe Area Group want the commission to reject that approach and instead open a full proceeding. In an April 1, 2026, letter to CPUC commissioners shared with Fortune, Sierra Club Vice Chair Tobi Tyler argued that the scale of the procurement—affecting 49,000 ratepayers dependent on an isolated, rapidly transforming grid—demands the transparency and public participation that only a formal proceeding provides. Tahoe Spark’s underlying protest states that “California does not produce a Liberty-specific forecast of demand, peak conditions, or procurement needed for numerous California communities in a high wildfire risk area.”

“You need to open a full proceeding and do a transparent process and understand what we look like in California policy, and what the long-term game is,” Hughes said. Even regulators are still sorting through the legal boundaries, she added: “They’re basically trying to decide what to do right now, or even what they legally can do.”

Even the regulators are still sorting through the legal boundaries, she added: “The procurement will have