Rocky Mountain Power sued the Wyoming Public Service Commission on Thursday, claiming the commission’s efforts to protect Wyomingites by slashing $23.5 million from the power company’s proposed rate hike that went into effect this year was unconstitutional.
Rocky Mountain Power, which is the Wyoming face of six-state umbrella utility PacifiCorp, requested a pair of hikes that came to a 29.2% increase before the commission last March — or about $140.2 million per year.
Wyomingites railed at the request, saying they could not afford it.
The commission in a Jan. 2, 2024, order allowed a rate increase of $53.9 million, far less than the utility had requested.
Pacificorp says its lawsuit against the Wyoming commission revolves around an alleged shortfall of $23.5 million within the cut pertaining to the utility’s federally required, costly burden of holding energy in reserve to keep the power grid reliable.
“The order will improperly cause PacifiCorp to lose at least $23.5 million revenue,” says the utility’s lawsuit filed Thursday in the U.S. District Court for Wyoming.
The Federal Energy Regulatory Commission (FERC) regulates PacifiCorp’s wholesale (intended for resale) power sales and its interstate power transmission.
State energy commissions, conversely, set rules over the utility’s retail, or direct-to-user power sales, and its service to local distributors.
The federal commission also requires suppliers like PacifiCorp to reserve some electric-generating capacity to respond to real-time demand changes across the grid to keep the grid switched on, the complaint says.
It adds that the federal commission requires transmission customers to pay the power company the cost of holding those reserves.
The Crux
That’s the crux of the argument.
Brad Mullins, a representative of the consumer group Wyoming Industrial Energy Consumers, had argued during hearings on the proposed rate hike that requiring people to pay toward these interstate reserve costs is to ask Wyomingites to subsidize programs in other states.
The commission appreciated and eventually reacted to that argument, writing in its January order that slashing the rate hike would ensure Wyomingites “do not subsidize FERC-jurisdictional customers,” and that the new adjustment “appropriately apportions the costs between (federal) and Wyoming ratepayers,” according to a quote rendered in the complaint.
PacifiCorp asked for a rehearing Feb. 6, and the commission denied that request April 19, reportedly.
The Claims
PacifiCorp/Rocky Mountain Power now claims that Wyoming’s adjustment offended federal law, and therefore violates the legal principle that federal regulations trump state regulations that would interfere with them.
The complaint says the WIEC convinced the commission that for PacifiCorp to hold power in reserve is a “bad deal” because the company can only get cost-based reimbursement for doing that, whereas that power would be more valuable if sold outright.
But PacifiCorp is disadvantaged because it’s set by federal rules, the complaint argues.
“Good deal or bad, the commission clearly may not supplant an exclusively federal regulatory scheme in this manner,” says the complaint, alleging further that Wyoming can’t either.
The complaint also alleges that the Wyoming commission wrongly valuated PacifiCorp’s cost to keep reserve energy — and estimated PacifiCorp’s compensation from federal wholesale customers at a higher amount than PacifiCorp is lawfully allowed to recover from those customers.
PacifiCorp says it cannot simply charge more in reserve costs from its federal customers to spare Wyomingites because those rates are federally regulated.
“The commission is explicitly second-guessing the FERC rates by concluding that it must reapportion costs to prevent Wyoming subsidization of FERC customers,” the complaint says.
PacifiCorp also accuses the Public Service Commission of violating the federal commerce clause, assigning federal control over interstate commerce. It claims the commission committed an “explicit attempt at local protectionism.”
The company is asking the court to declare the state commission outside the law, require the commissioners to reinstate the $23.5 million annual revenue and “enter any such orders necessary to make PacifiCorp whole from the commission’s unlawful actions.”
The complaint also asks for attorney’s fees and any other relief the court deems proper.
Clair McFarland can be reached at clair@cowboystatedaily.com.
