Both of Wyoming’s consumer advocate groups foresee more rate increases ahead for Rocky Mountain Power’s customers, beyond the utility’s latest double-digit rate increase proposal.
One reason is that some of the pressing rate increase questions were put off this time around, since a complicated power-sharing agreement between multiple states, including Wyoming, expires at the end of this year.
The latest, 10.2% rate increase the Public Service Commission is now considering follows two large rate increases that went into effect last year totaling 20.2%. If commissioners approve the latest rate increase, that will bring the overall rate increase in the past two years to 30.4%.
Rocky Mountain Power had initially requested a 14.7% rate increase this time around, but through the efforts of Wyoming Industrial Energy Consumers (WIEC) and the Wyoming Office of Consumer Advocates (OCA), an agreement was reached dropping that rate increase to 10.2% instead.
Public Service Commissioners said they plan to meet for final deliberations on the rate case by on April 15. If they approve the settlement agreement by then, the proposed settlement rate of 10.2% would go into effect June 1.
The end of rate increases, however, is not yet in sight, representatives of WIEC and OCA both acknowledged during their testimony over two days of public hearings for Rocky Mountain Power’s latest increase proposal.
Like many other businesses, Rocky Mountain Power is operating in an inflationary environment where rising costs are adding to everyone’s bottom line. But there are also some very large questions ahead, and the answers are going to play huge roles in determining how much ratepayers will owe for electricity in the future.
WIEC’s attorney Thor Nelson, with the law firm of Holland and Hart, told Public Service Commissioners that WIEC hired four teams of experts to sift through Rocky Mountain Power’s latest double-digit rate increase request.
“After investing a great deal of time and effort and energy and analyzing the utility’s filing, the simple conclusion is we just are not in a position, in accordance with Wyoming law, to say no rate increase is warranted,” he testified. “As we presented in our direct case, and as is before the commission of the settlement, we think there is a modest level that is necessary under Wyoming law, based on the costs that the utility is incurring and the investments that the utility has made here.”
And the end of necessary rate increases, Nelson later acknowledged in his testimony, is not necessarily in sight.
Interstate Compact Is Expiring
The biggest outstanding question, Nelson told Cowboy State Daily, will be the subject of future meetings that OCA, WIEC, and Rocky Mountain Power have agreed to “workshop” in the future. That question is the future shape of a six-state compact with PacifiCorp that expires at the end of 2025.
That interstate compact includes Wyoming, Utah, California, Oregon, Idaho, and Washington. Three of those states are headed one way when it comes to future power, while three others are headed in an opposite direction.
PacifiCorp has rather publicly struggled to mesh the green fuel policies of California, Oregon, and Washington with the pro-fossil fuel policies favored by Wyoming, Utah, and Idaho.
Questions about renewable energy were a dominant theme throughout a marathon, seven-day hearing in Wyoming in 2023, where Rocky Mountain Power sought two rate increases totaling an overall 29.2%.
Critics of renewables told the company then that Wyoming doesn’t want to pay for the green energy policies of other states. Rocky Mountain Power, however, contends that the renewable sources of energy it has built are not responsible for what many of its customers feel are astonishing rate increases. Instead, they have helped keep Wyoming rates among the lowest in the nation.
The policy divide, however, has only continued to grow. That has Utah, in particular, mulling a three-state compact with Wyoming and Idaho, which lawmakers there said would be more compatible with the direction Utah wants to go.
PacifiCorp’s President David Garlish told Utah legislators last year that a breakup like that would not be without costs. And just how those costs would hit individual rate payers in a new compact leaves a huge question mark over future rates for Wyoming.
Breaking Up Is Hard To Do
Rocky Mountain Power’s size has given the six states within its interstate compact certain advantages when it comes to keeping costs low. Economists refer to this as economy of scale. Downsize that, and costs could rise for rate payers in all six states, Rocky Mountain Power has suggested.
That increase would be in addition to increases ratepayers already face, from things like inflation, increasing wildfire risk, rising fuel costs, and other issues.
PacificCorp has 2.1 million customers in its six-state compact. Its power grid infrastructure stretches across 10 western states in all, with 17,100 miles of transmission lines, and generation resources in eight states totaling 10,833 megawatts.
The energy buffet has become diverse, which also mitigates risks. There’s coal, natural gas, hydroelectric, geothermal, and the largest wind fleet owned by a regulated utility in the Western U.S.
These assets are shared by all six states, and the costs have been allocated across the six states using a multi-state agreement that takes into account the amount of usage by the customers of each state.
There are benefits to being this size, PacifiCorp contended in its realignment study, submitted to Utah lawmakers in November. Those benefits have helped keep energy costs among the lowest in the nation for customers in the interstate compact, including Wyoming.
Separating into smaller companies serving smaller areas will be a complex process on top of the risk that losing economy of scale significantly adds to future rates.
“As a public utility, regulated by six states and the federal government, PacifiCorp cannot unilaterally restructure,” the company said in its realignment report to the Utah legislature. “With limited exceptions previously agreed upon by the states, each of PacifiCorp’s owned generation and transmission assets used to serve customers are shared by each state, regardless of its physical location.”
PacifiCorp also has covenants under its mortgage that aren’t going to allow partial transfer of assets to new entities without bondholder consent.
Protecting The Vulnerable
Wyoming OCA Director Anthony Ornelas also sees a period of great change ahead and said that certain questions about Wyoming’s rates cannot be answered until a new interstate compact is decided.
That left many questions in the current rate case unanswered, and that’s why the agreement includes a stipulation that OCA, WIEC, and Rocky Mountain Power will meet to discuss those areas in the future, once details of a new interstate compact have been decided.
“The parties recognized fundamental, or perhaps generational changes that are continuing to unfold both across the utility industry as a whole, and more specifically across PacifiCorp’s and Rocky Mountain Power’s footprint,” Ornelas said. “And it establishes a commitment by the parties to hold Wyoming-focused discussions, related to how electrical utility service will be provided and paid for by Wyoming ratepayers in the not-too-distant future.”
Ornelas also feels legislative input may be needed to decide how to deal with rising energy costs and its impact to the state’s most vulnerable populations.
Wyoming has long had a policy that each class of customer should face the full cost of providing service, within plus or minus 1%, Ornelas said.
“OCA continues to support this approach as being just and equitable, given our statutory obligation to represent all cases of customers, because it limits interclass rate subsidization,” he said. “One downside of this is that it also limits the ability to alleviate outsized rate increases that one class might receive over another as conditions change over time.”
Ornelas said OCA continues to welcome discussion with Wyoming lawmakers, the Public Service Commission, and other interested parties about developing a “strong tool bag” to help low income or vulnerable populations struggling to pay for utility services.
“However, absent legislative guidance, it is unclear how these types of policies that many other states have enacted could be included in the rate case proceeding, such as the one currently before this commission,” he said.
Renée Jean can be reached at renee@cowboystatedaily.com.
