Rocky Mountain Power customers will see a notable hike in their monthly electricity bills beginning in January, but far less than the 21.6% that the company wanted.
The utility will tap its 144,000 Wyoming customers for a general rate increase of about 8.3% for an extra annual $54 million, according to a Rocky Mountain Power calculation of multiple adjustments that the Wyoming Public Service Commission approved in November.
The commission must still verify the calculations and give its final approval in a written order due before the end of this month.
Wyoming AARP, which successfully pushed for a series of public hearings on the matter and rallied its members to submit thousands of written comments in opposition to the hike, is generally pleased that the commission significantly slashed the utility’s proposal.
“People are still gonna feel it,” Wyoming AARP Director Sam Shumway told WyoFile. “8.3% is still going to be a significant cost increase for some folks that are going to struggle to come up with that extra money. But I’m happy with how the public showed up.”
The commission will also issue its final decision this month on a separate, upward “fuel cost adjustment” of $50.3 million to account for higher-than-estimated natural gas, coal and power market purchases in 2022. That temporary, 12-month hike — about a 7.6% increase — was rolled into customers’ monthly bills beginning in July, but could be adjusted higher or lower.
The commission will hear that case, which is being challenged, on Dec. 19 in Cheyenne. The hearing will include an opportunity for public comment and will be livestreamed.
For now, and depending on what the commission decides regarding the fuel cost adjustment, it appears that Rocky Mountain Power customers will pay about 16% more for electricity beginning in January than they did the year before. However, the new rates are applied differently depending on whether customers are classified as residential, commercial or industrial. Exact percentages for each category are still being calculated, according to the utility and commission staff.
Rocky Mountain Power, and all of the five intervening parties in the case, have the option of asking the commission to reconsider its decision, as well as the right to a legal appeal.
What was cut
Rocky Mountain Power’s 21.6% rate hike proposal, initially filed in March, was a bit of a moving target throughout the process. During months of filings and rebuttals — and even during the seven-day hearing before the commission in October — the utility agreed to pull out some proposed charges and attempted to add others.
That’s why, for example, reports of the total general rate hike request varied between $137.5 million (the utility’s adjusted ask) and $140.2 million (the utility’s initial ask).
Initially, parties to the case estimated the commission had slashed the rate hike from $140.2 million to about $80 million at the close of the commission’s deliberations on Nov. 28.
But as the dust settles, it appears that the largest reduction to Rocky Mountain Power’s proposed hike is about $51 million. That’s due to the commission approving a lower forecast for the cost of coal and natural gas to fuel power plants, as well as power market purchases from third-party generators.
The utility estimated that its annual “base net power cost” in Wyoming is approaching roughly $354.5 million. But the commission lowered that figure to about $304 million, agreeing with counter-analysis from intervening parties in the case. Essentially, commissioners were convinced that the modeling tool that Rocky Mountain Power used was overly speculative.
The commission also rejected the utility’s request to tap ratepayers for the company’s “inflationary” estimate of rising insurance costs across several areas of liability, subtracting another $11.9 million. It was the first time in Wyoming that an electric utility proposed including such an expense in its rates, according to the commission, and it was added after Rocky Mountain Power’s initial filing in March.
Utilities with power lines stretching across the West, including Rocky Mountain Power’s parent company PacifiCorp, are coming under increasing scrutiny for wildfires ignited by their facilities. PacifiCorp recently agreed to pay $299 million related to a 2020 wildfire that destroyed homes and other property in southern Oregon.
No portion of such damage awards, according to the commission, will be passed on to Wyoming ratepayers in this particular case. However, whether such lawsuit damage payments, and utilities’ rising insurance premiums can be barred from rates they impose on their customers is an increasingly contested issue.
Another $10 million reduction is due to the difference between Rocky Mountain Power’s proposed maximum allowable rate of return of 10.3% and the commission’s approved 9.35%.
Several of the commission’s reductions, however, included speculative cost estimates that the company might verify in the coming year and bring back in a future rate hike request, according to commission staff.
Reactions
Even with Rocky Mountain Power’s “general rate” increase pared down from 21.6% to 8.3%, and its yet-to-be-finalized fuel cost adjustment of 7.6%, the combined electric rate hikes represent the largest Wyoming customers have faced in recent history. Thousands of Rocky Mountain Power customers railed against the utility during multiple public hearings and in thousands of written comments.
The magnitude of the parallel rate hike requests as proposed — a daunting total 29.2% — not only generated distrust in the utility, but also the Wyoming Public Service Commission, which has rate authority over monopolistic utilities. Such an increase would place a substantial burden on renters and homeowners while squeezing the bottom line for small businesses and Wyoming’s industrial sector, which makes up about 70% of Rocky Mountain Power’s customer base in the state by volume of electricity consumed.
Residential Rates
AARP’s Shumway said he’s disappointed that Rocky Mountain Power’s customers had to suffer the anxiety of a much larger increase based on the utility’s original ask. The difference between the proposed rate hike and what the commission found as “just and reasonable” breeds distrust in a company that enjoys a captive customer base, he said.
“I think the public process worked,” AARP’s Shumway said of the reduced rate hike. “When you have 5,000 [written comments] and when you have people showing up for public comment hearings and making their voices heard, the commission has to pay attention to that.
“To tack on an increased cost for [electricity],” Shumway added, “can be the straw that breaks the camel’s back for some folks living on fixed incomes. We’re going to be watching because there’s probably going to be more rate hikes.”
Sierra Club of Wyoming, one of the five intervening parties in the case, is similarly pleased that the commission made significant reductions to the rate hike. The episode reveals the cost risks associated with Rocky Mountain Power’s continued reliance on fossil fuels for a significant portion of its electrical generation capacity, according to the organization.
More than 90% of its proposed additional rate recovery was due to rising costs associated with coal and natural gas fuel prices, as well as rising costs to operate coal-fired generation plants, the utility testified. At the same time, the addition of renewable energy to Rocky Mountain Power’s system has saved its Wyoming ratepayers about $85 million, the company said.
Commercial Rates
“As long as utilities choose to continue to gamble on expensive and unpredictable fossil fuels, ratepayers will be kept on the hook, paying for a decision they have little say in when clean energy has been shown to be cost-effective and reliable,” Sierra Club of Wyoming’s Acting Director Rob Joyce said. “In the rate case, Rocky Mountain Power shared that renewable energy saved ratepayers millions of dollars. Still, instead of investing in clean energy and transitioning away from fossil fuels, Rocky Mountain Power continues to heavily invest in gas and coal, wasting ratepayer dollars.”
The case also prompted lawmakers to take action.
The Wyoming Legislature’s Joint Corporations, Elections and Political Subdivisions Committee drafted six bills this fall that aim to ensure Wyoming electricity customers pay only what’s necessary for utilities to provide reliable energy without lining executives’ pockets or footing the bill for other states’ demands for renewable energy. The measures will need to overcome a two-thirds vote threshold to be heard before the Legislature when it convenes its budget session in February.
For its part, Rocky Mountain Power maintains it was forthright in its calculations that reflect the rising cost of providing electrical service in the state.
“Our request was based on sound evidence submitted of the prudent actions taken to provide service to Wyoming customers,” utility spokesman David Eskelsen told WyoFile via email. “We will review the commission’s final written order, then determine our next steps.”
CLARIFICATION: This story was updated to clarify that although Rocky Mountain Power was not permitted to include projected rising insurance premiums in this rate case, the Wyoming Public Service Commission may consider such costs in future rate filings. -Ed
This article was originally published by WyoFile and is republished here with permission. WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.