Power transmission lines are pictured in front of the Lake Side natural gas power plant in Vineyard on Sunday, Feb. 4, 2024. (Photo by Spenser Heaps for Utah News Dispatch)
The Utah Public Service Commission approved a 4.7% increase in residential electricity rates on Friday, only about a quarter of the 18.1% that Rocky Mountain Power requested last August — and an even more substantial reduction than the original 30.5% increase proposal that appalled Utah leaders.
With the change, an average single-family residential customer using 700 kilowatt hours per month will see a monthly increase in their utility bill of $4.31 this year, about $10 less than Rocky Mountain Power proposed.
Commissioners said in the order that the 18.1% ask was unprecedented both in the scope of issues it addressed and price. Ultimately, the decision to only approve a small portion of the rate proposal was attributed to the reasons Gov. Spencer Cox and legislative leaders had cited as they promised to do everything in their power to avoid such an increase — Utah ratepayers shouldn’t pay for other states’ costs.
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“I think there’s two themes to this case,” Chris Parker, director of the Utah Division of Public Utilities, said on Monday. “They are that the commission wants to make sure that Utahns aren’t paying expenses that need to be borne by other states’ customers, and that Utahns should not be paying for imprudent actions by the utility.”
After wildfires plagued Oregon in 2020, PacifiCorp, Rocky Mountain Power’s parent company, saw an impact in its equity and also “paid $550 million in dividends to its parent company, Berkshire Hathaway, after it became aware of potential wildfire liability,” according to the order.
“The current capital structure of the company is primarily a result of its own actions,” commissioners wrote. “It is unreasonable to expect RMP’s ratepayers in Utah to pay higher rates because of the wildfires in Oregon and the depletion of cash reserves by these dividend payments.”
Rocky Mountain Power lowers its rate increase proposal to 18.1%, down from 30.5%
The commission also rejected making payments for insurance premiums “driven far beyond industry norms for Utah,” legal fees associated with the Oregon wildfire litigation, and other costs tied to “specific state climate action policies or specific state agreements driven by individual state circumstances (particularly in Washington and Oregon).”
The order, however, approved some smaller expenses for wildfire mitigation, and an increase in the low-income Lifeline assistance credit, an electricity bill discount program for low income Utahns — from $13.95 to $18 a month.
As of Monday afternoon, PacifiCorp was still reviewing the nearly 200-page order, David Eskelsen, a spokesperson for the company, said.
“We are determining its implications and our next steps in meeting our responsibility to provide electric service to our customers,” Eskelsen said in a statement.
It’s possible that the company could appeal the decision, triggering a revision process. The utility is also expected to present its case in May to recover some past costs through its Energy Balancing Account — a price adjustment that either credits or debits users for differences between power prices and the other market costs that are somewhat outside the control of the utility.
PacifiCorp has also taken legal action against other states it serves, like Wyoming, for their partial denial of rate increase.
The rate change took effect immediately once the commission’s order was issued.
A controversial rate increase
Utah has for years flaunted its ranking at the top of states with the cheapest electricity. So, when Rocky Mountain Power proposed a two-digit increase in rates, it woke tensions with the state.
The company listed increased costs of fuel and wholesale power in addition to ongoing new electric transmission and generation projects for a substantial part of the 30.5% rate increase, as well as the escalation of wildfire risk insurance premiums.
That triggered legislative proposals to change Rocky Mountain Power’s rate structure, a firm request to split PacifiCorp into two consortiums of blue or red states, and a strong social media post from Cox.
“The proposal is completely unacceptable,” the governor wrote on an X post in June. “The audacity and lack of awareness with this request seriously calls into question management at RMP. I will do everything I can to make sure a rate increase of that magnitude never sees the light of day.”
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Some of those bills, including one that would have made Rocky Mountain Power pay for everything that’s currently included in the Energy Balancing Account, didn’t materialize. But, there’s still a big focus on studying the utility’s books to determine what costs should and shouldn’t be in Utahns’ bills.
Parker, from the Division of Public Utilities, said that a big item the commission denied last year in the company’s Energy Balancing Account case was tied to expenses covering the cost of greenhouse gas allowances the utility bought to comply with a Washington state law.
And this time, the denials are mostly because of wildfire liability. While he sympathizes with the company’s challenges, he said it’s its duty to provide appropriate services at reasonable rates.
“And if that requires additional infusions of equity that ratepayers aren’t responsible for paying, then that’s what it requires. That’s their obligation,” Parker said. “The privilege of being a public utility is that you’re a monopoly, and the obligation of being a public utility is that you have to act in the public interest.”
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