State slaps down utility’s effort to relitigate controversial rate hike

Rocky Mountain Power, Wyoming’s largest electric utility, filed an application for “rehearing” portions of two 2023 rate cases, which began with a request to hike monthly utility bills by 29.2%, or a total of more than $190 million. Ultimately, the Wyoming Public Service Commission approved rate increases for a combined 8.3%.

But the state was in error, the utility said, when it denied a request to tap Wyoming ratepayers for $23 million to comply with a federal law requiring it to have third-party power generation on hand, and $9 million in climate mitigation payments required by Washington state for the company’s Chehalis natural gas power plant there.

The utility’s rehearing request also sought to raise the bar for what types of rate changes require a full hearing before the commission, and thus open the door to intervening parties.

The three-person Public Service Commission unanimously declined to reopen the case, saying the utility failed to meet the burden of proof for such an action on all three issues.

“There has to be a substantial reason to grant rehearing,” Commission Chair Mary Throne said, “and for several reasons, I don’t believe Rocky Mountain Power has met that standard.”

In many instances, the utility’s modeling to arrive at charges applicable to Wyoming ratepayers was confusing and unconvincing, Throne added.

“The numbers changed throughout the course of the proceedings,” she said. “Fundamentally, we found — and it’s clearly outlined in our order — that Rocky Mountain Power did not meet its burden of proof” in the 2023 rate case hearing.

In other instances, the commission simply disagreed with Rocky Mountain Power’s application of utility industry rate-making practices, as well as interstate commerce law for how multi-state utilities apportion costs for system-wide expenses to ratepayers in different states.

‘Offended’

Before the commission handed down its decision Thursday, the Wyoming Office of Consumer Advocate noted that Rocky Mountain Power referred to a state statute in justifying passing charges required by Washington’s Climate Commitment Act to Wyoming ratepayers, but that it only partially quoted the statute.

“This very notion…on its face, is offensive to the [Office of Consumer Advocate],” the agency’s attorney Shelby Hamilton said.

Throne agreed, asserting that the statute — reflected in its 2023 decision order — is clear: Wyoming is not beholden to take on such utility costs imposed by other states.

“I’m just going to say without sounding too much like I’m lecturing the company that, like the [Office of Consumer Advocate], I was somewhat offended with the parsing of our order and taking a paragraph out of context,” Throne said.

“The company tried to argue throughout most of the hearing that the Climate Commitment Act was akin to a tax,” Throne continued, “and therefore should be passed along like any other tax. And obviously we didn’t agree with that characterization. So now to have that response appear in a rehearing and saying that, somehow, we were wrong to suggest it was somewhat akin to a renewable portfolio standard takes that whole discussion out of context, and it was really, I don’t think, a valuable use of our time.”

Reached for comment, Rocky Mountain Power said in an email to WyoFile, “The company’s brief, consistent with regulatory and legal requirements, fully supported its position on issues presented in the case.”

More rate hikes coming?

Although the Public Service Commission has ruled that Rocky Mountain Power may not relitigate the rate cases that were settled in 2023, nothing prevents the utility from coming back with new rate hike proposals.

For example, Rocky Mountain Power and several other regulated utilities are allowed to file annual “energy cost adjustment mechanism” requests. These allow utilities to “true-up” estimated-versus-actual costs for commodities like natural gas and coal to fuel power generation facilities, as well as electrical power they buy on the open market. Sometimes these result in a discount to ratepayers, and sometimes they result in a temporary increase.

The utility’s energy cost adjustment in 2023 reflected fuel cost overruns resulting from a 2022 cold snap, for example, that spiked demand and market prices for natural gas. This year, Rocky Mountain Power may file a similar “true up” request based on estimated-versus-actual costs in 2023. The Office of Consumer Advocate said it expects the utility to file such a request later this month.

The company may also request a new “base rate” adjustment regarding larger system-wide operational costs.

Meantime, Rocky Mountain Power earlier this month updated its Integrated Resource Plan — a long-term “roadmap” for how it will meet customers’ electricity needs amid a changing regulatory environment. Several conservation groups have panned the updated plan for allegedly shifting its investment focus from renewable sources of energy to extending its reliance on coal and natural gas — a reliance that Rocky Mountain Power testified last year accounted for more than 90% of its proposed rate hikes in Wyoming.

The company’s updated planning road map includes a partnership to explore adding carbon capture technology to either the Wyodak coal-fired power plant near Gillette or at one of four coal units at the Dave Johnston plant near Glenrock. The plan also includes a commitment to continue exploring carbon capture for two coal units at the Jim Bridger power plant east of Rock Springs.

Rocky Mountain Power’s Wyoming ratepayers could be on the hook for billions of dollars if the plants are ultimately retrofitted with the technology.

WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.

This story was posted on April 12, 2024.