Rocky Mountain Power appears set to capture more of that 2023 nearly 30% rate increase that the Wyoming Public Service Commission blocked after a federal judge ruled that the state’s adjustment cheated the company of $23.5 million in reasonably incurred operating expenses.
When and how Rocky Mountain Power will recoup that $23.5 million from Wyoming customers is not yet clear.
Public Service Commission’s Secretary and Chief Counsel John Burbridge told Cowboy State Daily by email he is not able to discuss the matter.
Rocky Mountain Power spokesman Jonathan Whitesides told Cowboy State Daily there have been actions surrounding the disputed costs since then. It will take time to figure out how much of that figure is still owed to the company, as well as how it should be recouped going forward.
That’s assuming neither Wyoming Public Service Commission nor Wyoming Industrial Electric Consumers (WIEC), an advocacy group for large electrical customers in Wyoming, appeals the ruling.
WIEC attorney Thor Nelson told Cowboy State Daily that WIEC is indeed evaluating its appeals options, as well as the overall decision, to better understand the impact to Wyoming consumers.
“Given the judge’s decision, there’s likely to be a rate increase that would flow from that, although what that looks like is a little bit complicated to figure out,” Nelson said. “So, we’re also trying to analyze that.”
The process for making a rate change could look different this time, Nelson added.
“This is not a normal appeal from an agency action to a Wyoming court, where ordinarily you would then expect the matter to be remanded to the agency,” Nelson said. “This was a separate complaint. So, the process for doing something different is a little bit less clear. Maybe a lot less clear.”
Nelson said the matter might be raised during the next pending energy cost adjustment hearing, which is scheduled for action in November.
“It’s possible that could be a vehicle where a rate increase would manifest itself,” Nelson said. “But we’re sort of waiting for Pacific Corps to determine what they’re going to do with it. And of course, all that is subject to the potential for either us or the commission to file an appeal of this decision.”
An appeal could mean an even longer timeframe for recouping the costs, into next year and beyond.
Warren Buffet Gets A Break
Wyoming AARP Associate State Director Tom Lacock said the ruling is just another in a series of blows that hurt Wyoming seniors on fixed incomes.
“Finally, Warren gets a break,” he said. “But our concern is, what does this mean for people on fixed incomes?”
In a survey AARP conducted in July, nearly two-thirds of Wyoming adults age 50 and up reported significant increases to their electric bills, Lacock said. Many of those also expressed concern that rates will continue to rise dramatically into the future, with no end in sight.
“When you have reached an age where you’re not going back to work and you are on a fixed income, every little bit matters,” Lacock said.
Lacock has been following the work of an energy working group, established by the legislature to prevent large load customers from coming in and causing rates to spike for everyone.
“Wyoming was one of the first to say, if you’re a large load customer, you bear the brunt,” Lacock said. “You can’t come in and make power more scarce, which then increases the price for everybody. You have to have your own tariff, your own contract with the energy company itself.”
The energy working group is revising and updating that, Lacock said. He’s expecting new legislation for the next session that will protect residential customers from demand spikes caused by data centers and other large load customers.
“I read not too long ago that Oregon’s data center use doubled between 21 and 23 and they actually had a record number of disconnections in 2023, because (consumers) saw that power cost increase,” Lacock said. “So hopefully we are insulating residential customers from similar issues or concerns.”
No Passing The Buck
While the original rate increase that Rocky Mountain Power had sought in 2023 was in the neighborhood of 30%, the current case deals with a much smaller slice of that overall rate case.
The dispute revolves around how much cost Rocky Mountain Power allocated to reserve energy generation for interstate transmission, referred to as OATT. The capacity and the rates set for it, are both mandated by the Federal Energy Regulatory Commission (FERC).
WIEC had argued during the rate case that the company’s modeling was inflating the cost over and above what they should be. They also argued that the structure of the cost allocation was putting Wyoming customers on the hook to subsidize out-of-state customers.
“If (Pacific Corps) FERC-approved OATT rates are inadequate to recover its cost of serving non-native customers, it would be most appropriate for (Pacific Corps) to seek to recover the funds through its FERC rates, not through an increase to Wyoming customer’s rates,” WIEC consultant Brad Mullins testified at the time.
However, arguments about how to divvy up these costs have already been settled by case law, including the 1981 case, Nantahala Power and Light Co. v. Thornburg, U.S. District Judge Kelly Rankin ruled.
Wyoming cannot pass the buck to out-of-state customers simply because it’s “dissatisfied with the allocation of costs between in-state customers and other customers,” Rankin wrote. “That is precisely the reasoning prohibited by Nantahala and similar cases.
“Furthermore, suggesting that Plaintiff’s FERC-approved OATT rates might be inadequate seems tantamount to finding that they are unreasonable, which is the essence of state action that the filed rate doctrine was created to prohibit.”
Energy Landscape Growing More Complex
The court case lands in the midst of many moving parts for Wyoming, and at a time of increasing national complexity when it comes to public energy utilities. Data centers have ratcheted up the demand for power in unprecedented ways.
The situation is something Wyoming Office of Consumer Advocate Director, Anthony Ornelas, has been watching for some time. He expects that the sector will continue to present challenges for consumers for years to come.
“The reality is we have aging infrastructure and increases in electrical demand unlike anything we’ve seen in several decades,” he told Cowboy State Daily. “So, at a minimum, there’s a need for new infrastructure to replace some of the old infrastructure. And we’re dealing with issues we previously have not had to contemplate, like wildfire risk, wildfire liability.”
There has been instability in coal and natural gas markets to contend with as well, Ornelas added, as well as a shifting see-saw of federal and state policies, all of which affects how utility rates are set.
In the midst of that, momentum has been building to break PacificCorp into two entities. The three red states, which include Wyoming, would break away from the three blue states, which include Oregon, Washington and California.
That would leave Wyoming free to stick with abundant and reliable energy sources already at hand, such as coal and natural gas, rather than being pushed to support renewable sources of power like wind and solar, which Wyoming leaders have contended are much more expensive to build out.
Ornelas said the court ruling is something that’s being reviewed to better understand what it will mean for ratepayers.
“The dollar figure is $23.5 million, approximately, provided in the court case,” he said. “But I don’t think it’s quite as simple and direct as that. There have been multiple periods since the 2023 rate case, so a lot of moving parts. We’ll be watching it closely to see how it plays out from here.”
Renée Jean can be reached at renee@cowboystatedaily.com.
