Estimated read time: 5-6 minutes
- A Utah legislative committee advanced a bill that targets Rocky Mountain Power's recovery account amid rising rates.
- The bill requires proof of rate benefits for Utah customers and bans cost recovery from Utahns for out-of-state benefits.
- Rocky Mountain Power argues eliminating the account could create risks for customers.
SALT LAKE CITY — A bill that targets a Rocky Mountain Power recovery account cleared its first hurdle in the Utah Legislature as lawmakers vented about the company's rising rates.
Members of the House Public Utilities and Energy Committee voted 9-1 on Wednesday to advance HB72, sponsored by Rep. Carl Albrecht, R-Richfield, during a meeting with tense moments here and there.
HB72 directs the Utah Public Service Commission to reject utility cost increases unless the provider can show the rate increases benefit Utah customers and ban cost recovery from Utah ratepayers "for facilities and programs primarily benefiting other states."
It would also eliminate energy balancing account cost recovery for any costs recovered after 2024.
The account was created to balance out the differences between the rates customers pay and the actual power costs to provide electricity. It was created in 2011 with a 70-30 split between customers and shareholders on costs higher than the rates, but it was amended by the Utah Legislature in 2016 to put the full cost on customers.
There was one rate increase after that, which came in 2020. However, Rocky Mountain Power requested a 30% rate increase last year that would take place in 2025 and 2026. It ultimately amended the request to 18% after pushback from residents and state lawmakers.
The request is still pending final approval by the Utah Public Service Commission before it can go into effect later this year.
While other utility companies, like Enbridge Gas, also use energy balancing accounts, Albrecht said the state hasn't run into the same number of cost "components" as it has with Rocky Mountain Power. He argued that the account is "very hard to audit" and doesn't incentivize efforts to be efficient, as he presented his bill to the committee.
He also questioned if Rocky Mountain Power was doing its best to keep power costs low for customers.
"Rocky Mountain Power is a regulated monopoly in the state of Utah with a guaranteed rate of return," he said. "Should the customers pay the entire bill, or should the stockholders have a little skin in the game? ... There's just a lot of questions you can ask that's contained in the energy balancing account."
Rocky Mountain Power officials disagree, contending that eliminating the account would be bad for customers. James Owen, Rocky Mountain Power's vice president for environmental, fuels and mining, said, yes, the company's account is "complex," but he said it's because the company's system is complex.
He adds that the company already has to prove to the Utah Public Service Commission that its actions are "prudent" to recover the imbalance between rates collected and true power cost.
"While it has been described as a catch-all for those variance costs, that's appropriate because of the complexity of the system," he said. "It's impossible to always have those costs exactly right during a rate case or during the time when you're providing those estimates."
The two sides seemed to be at a standstill over what is behind rising costs. Albrecht questioned if issues in other states factored in rate increases. PacifiCorp, Rocky Mountain Power's parent owners, ended up paying over $700 million in settlements for fires started in Oregon — one of the five other states it provides power to — in 2020.
Owen said customers in all six states essentially share the cost and benefits of the power grid, but two issues in 2022 ultimately created the biggest cost burden: the Lila Canyon Mine Fire in Carbon County and the Russia-Ukraine conflict. The fire, he said, wiped out about a quarter of the state's coal supply, while the conflict created a spike in international coal demand and costs.
"We had a situation where our domestic coal suppliers were looking to export to leverage higher international prices at the same time we were short coal here in Utah specifically because of Lila Canyon," he said, adding that the company endured the costs at the time to keep power plants afloat.
He believes eliminating the energy balancing account would have "negative impacts" because it could force the company to switch to more expensive alternatives to keep lights on or move away from coal altogether because of its price uncertainties.
"It would create more risk and more uncertainty here in Utah," he said.
Many members of the House Public Utilities and Energy Committee weren't convinced with Rocky Mountain Power's stance, though, voicing frustration with the company and its recent decisions.
Rep. Casey Snider, R-Paradise, questioned why customers had to brunt the costs tied to the fire that they had no control over, given the way the balance is set up now. He added that a report the state asked for about potentially breaking Rocky Mountain Power off from other states "did nothing" to answer concerns.
Others on the committee said they had heard plenty of negative feedback about the rate increases while out on the campaign trail last fall.
"I think there may be some time for soul searching on the part of PacifiCorp and Rocky Mountain Power," Snider said. "Clearly, you have moved away from what you used to be in terms of a partner, and have created adversaries of what were formerly friends."
In the end, the committee voted 9-1 to advance the bill to the House of Representatives. If approved by the House and Senate by March 7, the bill would go into effect on May 7.
