The Utah Public Service Commission two weeks ago issued separate but similar orders that sent analysts at the two utilities back to their calculators and spreadsheets. The result is both companies now must ask for much lower rate increases than they first applied for in December.
Rocky Mountain Power late last year asked for a $161 million rate hike. It now is asking for an increase of just $100 million, or about 38 percent less than it originally requested. If that increase is approved by the PSC, typical Utah electricity customers will see their power bill go up around $2.80 a month instead of the $4.50 the company initially projected.
Questar Gas Co. has lowered its requested rate hike from $27 million to $22 million, an almost 19 percent decrease. If approved, typical Utah natural gas customers will see their monthly gas bill rise $3.19 instead of $3.92.
"If the PSC wants us to proceed more cautiously [with this rate case], that's fine," said Dave Eskelsen, spokesman for Rocky Mountain Power. "What their ruling does, though, is raise the issue of whether we may have to file our next rate case sooner than we had anticipated."
When they filed their rate cases in December, the two utilities requested that the PSC set rates based on what is known as a "future test year." In this case, the period from July 1, 2008, until June 30, 2009.
What that meant was the two companies wanted the rates they would have been allowed to charge their customers to reflect the amount of money they anticipated spending on their systems during that 12-month period.
However, there were objections to the use of that test this particular year.
The Utah Association of Energy Users, a group of industrial customers represented by Salt Lake attorney Gary Dodge, was concerned about the accuracy of the two companies' expenditure projections given the uncertain state of the nation's economy.
"There are questions of whether inflation is going up or down, and whether or not we're in a recession," Dodge said. "And it just seemed we'd be better off given that uncertainty if everyone used a test year that wasn't so far out."
The PSC agreed and reined in the company's request. Rates now will be set based on Rocky Mountain Power's and Questar's expected expenditures during calendar year 2008.
Utah consumer advocate Roger Ball of the Utah Ratepayers Association expressed concern that by allowing use of a "future test year" the utilities were shifting their investment risk from their shareholders onto the backs of their customers.
"Traditionally, utilities are allowed to earn their money based upon the capital they invest, but customers weren't expected to begin paying for projects before they started benefiting from them. A future test year means they [customers] start paying before they get the benefit," he said.
Both utilities maintain they will be investing heavily in their systems in the coming years to ensure they can continue to adequately serve a growing number of customers.
steve@sltrib.com
