Rocky Mountain Power submits largest rate hike request ever
Rocky Mountain Power is asking for the largest rate hike in its history, a $232.4 million increase that if approved by state utility regulators will raise the typical Utah homeowner's electricity bill by approximately $120 a year.
And that may just be the beginning.
Due to what it describes as the rising demand for electricity throughout the state, the utility warns Utah consumers may see annual price increases of 8 percent to 10 percent annually for the next decade.
"Our Utah customers are using more electricity than ever before," Rocky Mountain Power spokesman Dave Eskelsen said.
Low electricity rates are attracting a lot of new industry, which puts pressure on existing generating capacity, he said.
The power company, which filed the rate hike request earlier this week without announcing it publicly, said it needs the 13.7 percent increase to help it deal with the steadily rising cost of producing electricity and to upgrade its existing generating facilities.
The $232.4 million requested increase dwarfs the utility's previous record high request of $194.1 million in 2006, although in that case the power company eventually settled for a $115 million increase, or a 9.15 percent raise in its rates.
"Will they end up getting all of the $232 million? I seriously doubt it," said Michele Beck, director of the Utah Office of Consumer Services, which advocates for the state's consumers and small business owners in utility rate cases.
"Generally, Utah consumers aren't aware of how much electricity they consume," Beck said. "While the nation saw a 10 percent to 20 percent decline in electricity use due to the recession, here in Utah it just resulted in a slowing of the rate of growth."
Although Beck said she understands the company's need to raise its rates, the size of the requested increase shocked her.
The U.S. Energy Information Administration expects the retail sale of electricity nationwide to fall by 2.1 percent this year. It forecasts that prices will increase only slightly over the next two years around one half percent in 2011 and 1 percent in 2012.
In Utah, Rocky Mountain Power projects consumption will increase 7.1 percent over the next two years.
Eskelsen said a primary driver behind the company's latest request is the increasing cost of producing electricity.
"We're now primarily building natural gas-fired plants and wind generation," he said. "And while those are the lowest cost options today, they are about twice as expensive to build as the coal-first generation we were developing in the 1970s and 1980s," he said.
Tim Funk of the Crossroads Urban Center in Salt Lake City said that organization "definitely" will get involved in the rate case to represent the interests of low-income Utahns. "A rate increase request of that size is hard to ignore," he said.
Under state law, the Public Service Commission has 240 days to rule on Rocky Mountain Power's rate increase request.
"We'll be using our in-house experts and will be bringing in some from outside to dig into this filing," Beck said. "Obviously we hate to see any kind of increase for consumers, especially when times are tough, but at the same time we also want to make sure that we have reliable service."
RMP's five largest rate-hike requests
Rocky Mountain Power is requesting to increase its rates by $232.4 million or 13.7 percent, its largest rate hike request ever. The other largest requests are:
Effective date Request Granted Percent increase
Dec. 2006 $194.6 million $115 million 9.15%
August 2008 $161.2 million $36 million 2.72%
May 2009 $160.6 million $45 million 2.32%
Feb. 2001 $142 million $70 million 9.40%
April 2004 $125 million $65 million 6.98%
Source • Utah Public Service Commission