Rocky Mountain Power settles rate case
Utilities • Rates will rise short-term but pact keeps bills down over the long run.
Published: August 8, 2012 09:41AM
Updated: August 7, 2012 08:06PM

Rocky Mountain Power has agreed to a two-part settlement in a pending rate case, a pact that will increase the typical Utahns’ monthly electricity bill by about $4.55 a month starting in mid-October, followed by another $2.48 cent hike in fall 2013.

The agreement —which also bars the public utility from seeking another rate increase before January 2014 —has the support of consumer advocates, the state’s Division of Public Utilities and many of the state’s large industrial energy users.

“We think this is a fair settlement,” said Michele Beck, director of the state’s Office of Consumer Services, which oversees the Committee of Consumer Services, the official voice for residential customers and small business owners in utility rate cases. “It will help keep rates down in the long run.”

The Utah Public Service Commission is expected to schedule a hearing later this month to consider whether the settlement is in the public interest and should be approved.

In January, Rocky Mountain Power sought a $172.3 million rate hike, or a roughly 10.5 percent increase, in what it charges customers statewide for electricity. If approved in its entirety, that request would have raised the typical Utahns’ power bill by about $7.50 a month.

The power company argued that steadily rising demand for electricity in Utah has forced increased spending on new power-generating facilities, upgrades to its transmission lines and new environmental equipment for its coal-fired plants.

“We are still in a building phase and despite the recession have seen continued growth in demand on our system,” said Dave Eskelsen, Rocky Mountain Power’s spokesman for Utah.

Instead, the settlement, filed late Tuesday, caps the hike at a total of $154 million, with a $100 million rate increase later this year and another $54 million hike in 2013.

Beck acknowledged settlement appeared to give the regional utility company most of what it wanted. But, she explained, the settlement also benefits ratepayers by keeping rates down well into the future.

She said in looking at the company’s costs in 2013, for example, the Office of Consumer Services’ staff identified approximately $40 million Rocky Mountain Power would have been entitled under state regulations to recover from its customers. In exchange for agreeing to the second $54 million portion of the rate hike, Beck said, the utility effectively eliminated $20 million to $25 million from future rate hikes.

``It was a trade off,’’ she said.

Beck said the utility also gave up its demand that Utah customers help pay for the cost of removing a dam on the Oregon- California border, a plan with would have cost Utah ratepayers $7.4 million annually for the next 10 years.

“We didn’t believe that Utah ratepayer had an obligation to contribute to that effort,” she said. “And we were ready to go to the mat on that issue.”