Electricity bills could climb 22% for Rocky Mountain Power customers

Electricity bills could climb 22% for Rocky Mountain Power customers

Wyoming’s largest electric utility, Rocky Mountain Power, wants to hike prices by nearly 22%, a request that’s primarily driven by volatile natural gas and coal markets, according to the company. 

It’s the largest rate increase request the regulated-monopoly utility has made in more than a decade, and it would result in an additional $16.42 per month for the average household customer, according to the company.

A hearing on the matter, including an opportunity for public comment, will take place from 5:30 p.m. to 7 p.m. Monday at the City Council Chambers in Rock Springs. The hearing will also be live streamed.

The proposed rate hike faces scrutiny from the Sierra Club Wyoming Chapter, Walmart, the Wyoming Office of Consumer Advocate and an industry group — all intervenors in RMP’s rate request. Though it hasn’t filed as an intervenor, AARP Wyoming requested the public hearing scheduled for next week.

“We just want to make sure it’s fair and reasonable and not a dime more than they need.”

Sam Shumway, AARP Wyoming

“We feel like [the proposed rate increase is] a little bit speculative,” AARP Wyoming Director Sam Shumway said. “We think this is higher than they actually need. The 21.6% is just astronomical.”

If approved as proposed, the new rates — which vary between residential, business, agricultural and industrial customers — would take effect January 1, 2024. The increase would generate an extra $140.2 million per year for RMP, which is part of the larger northwest power company PacifiCorp.

RMP’s rate case

Approximately 97% of the annual $140.2 million increase that RMP wants to capture from Wyoming customers is “related to resetting the new base for the Energy Cost Adjustment Mechanism,” according to written testimony by Joelle R. Steward, RMP’s senior vice president of Regulation and Customer/Community Solutions.

The ECAM is a formula to true-up the difference between forecasted fuel costs and actual costs for commodities such as natural gas and coal used to generate electricity.

Since 2020, “net power costs have been climbing annually at unprecedented levels,” Steward said, “driven by increases in regional market prices and fuel costs as well as new state and federal environmental compliance requirements.”

Rocky Mountain Power’s cost of service, and the rates it charges its customers in Wyoming, have increased in recent years. (Rocky Mountain Power)

Historically, regulated utilities have split the risk of fuel cost adjustments with their customers in what’s referred to as a “cost sharing band.” In recent years, RMP was responsible for 20% of fuel-cost overruns while its Wyoming customers picked up 80%. In its current request, RMP wants to eliminate the cost sharing band to make Wyoming customers accountable for 100% of fuel cost overruns.

The company wants to ensure its profitability in Wyoming. Without the annual $140.2 million rate increase, RMP’s rate of return would be 1.32% — far below the maximum 9.5% currently allowed by the Wyoming Public Service Commission, the company said. RMP is currently proposing a maximum rate of return of 10.3%.

“[RMP] understands the impact that a rate increase has on its customers and the company is taking long-term actions that continue to position the company as a least-cost, least-risk utility through this changing energy landscape,” Steward said.

Separately, RMP has asked the Wyoming Public Service Commission for a limited-time rate increase to cover $50.3 million in unexpected fuel costs and wholesale power purchases as the result of heat waves, extreme weather and drought in 2022. That request is still pending.

Regulators granted the company a 3.8% energy cost adjustment totalling $23.6 million in 2022, citing extreme weather events in 2021.

Fossil fuel risk

Though PacifiCorp plans to gradually eliminate coal and add more sources of renewable and low-carbon energy to its power generation portfolio, the company is still exposed to wild commodity swings in fossil fuels. The company has known the risks of relying on fossil fuels for a long time, and it shouldn’t be allowed to completely shift that risk to its customers, Sierra Club Wyoming Chapter organizer Rob Joyce said.

Conveyors pile coal at the Jim Bridger power plant outside Rock Springs on January 19, 2022. (Dustin Bleizeffer/WyoFile)

“The company is basically saying they can no longer accurately predict these markets for things like coal and natural gas,” Joyce said. 

Equally worrisome, Joyce said, is the fact that the company plans to add more natural gas to its energy mix. Several of the coal units it plans to decommission will be converted to natural gas.

RMP essentially operates as a regulated monopoly. Wyoming customers don’t get to choose their electricity provider. It’s unfair, Joyce said, for that monopoly to saddle its customers with 100% of the fossil fuel market volatility risk when customers have little influence in how the company structures its energy portfolio.

“We feel it’s important to intervene and for folks to be engaged in these rate cases and the integrated resource planning that the company is going through currently,” Joyce said.

An extra $16.42 per month for the average household is a big deal for many residents in the state, AARP Wyoming’s Shumway said.

“The reality is, as many of our members live on fixed incomes, that’s a chunk of change,” Shumway said. “That’s an extra $200 a year that somebody is going to have to come up with in addition to what they’re already paying for their utilities.

“Whatever the rate increase is,” Shumway added, “we just want to make sure it’s fair and reasonable and not a dime more than they need.”

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