Regulators advance utility's plan to change way it bills customers

Rocky Mountain Power is closer to gaining permission to revamp the way it bills Utahns for their electricity.

State regulators said Monday they will proceed with their examination of a proposed "energy cost adjustment mechanism," or ECAM, which would allow the utility to more quickly pass on to customers the cost of fuel and the electricity it buys.

The power company contends its plan will help lower its costs and allow Utahns to better respond to changing energy prices. Critics argue it will raise bills by removing crucial incentives now in place that encourage the company to keep its costs low.

In its order approving additional hearings, the Public Service Commission said it needs more input to determine if an ECAM would be in the public interest. But the agency indicated that despite the concerns of those who oppose the plan, an ECAM can be developed that doesn't harm consumers.

"The critiques show that it is not necessarily the use of an ECAM that presents the problems ... but rather the inclusion or non-inclusion of specific elements," the PSC said in its written order.

Rocky Mountain Power would set up an account to track the difference between what Utahns pay for their power and what it costs for the fuel the utility needs to run its plants. The account also would track the cost of any electricity buys on the open market.

Then, it wants to be able to periodically adjust customers' monthly bills to recover those

costs. Bills would go up if the cost of fuel and buying power rose, but would go down if those costs fell.

As things now stand, the power company must wait to recover those expenses until it files a rate case. And that means the company can at times have tens of millions tied up between decisions.

Rocky Mountain Power spokesman Dave Eskelsen said the company welcomes the chance to move the process forward.

"A well-designed [ECAM] has benefits for both our customers and the company," he said "This is demonstrated clearly by Questar Gas' use of such a mechanism in Utah, and Rocky Mountain Power's use of such mechanisms in other states.

Critics argue the system now in use is of more benefit to consumers. They said that if the utility is able to reduce its costs by operating more efficiently, it gets to keep the money it saves until the next rate case -- a powerful incentive for the company to keep its operating costs low.

Laura Polacheck, director of advocacy for AARP Utah, which opposes the power company's proposal, said the organization was disappointed by the PSC decision.

"The more costs that are removed from recovery in a rate case, the less incentive there is for the utility to operate efficiently," she said.

In testimony filed last month with the PSC, the AARP argued that "regulatory lag" -- the time between when a utility incurs costs and when it is able to recover them -- "has long been recognized as a process the provides the incentives (to keep costs low) that competition provides in other industries."

Michele Beck, director of the Utah Office of Consumer Services, contends the PSC's order addresses key concerns raised by the Committee of Consumer Services, which is charged with representing the state's consumers in utility matters.

Among those, the PSC wants additional information on whether an ECAM would affect the company's decision to produce more of its own power or just buy the electricity. Company-owned plants can protect consumers from wildly fluctuating energy prices.

Beck has argued that by making it easier for the company to recover the cost of the energy it purchases, an ECAM would be a disincentive for the utility to build its own plants.

"Utah consumers can be assured that the PSC has recognized what the key issues are in this matter," Beck said.

steve@sltrib.com