Energy costs surge as Rocky Mountain Power faces scrutiny

In a recent government meeting, Rocky Mountain Power officials presented an update on the Energy Balancing Account (EBA), a regulatory mechanism designed to track and recover variances in electricity generation costs. Tom Carter, Vice President of Government Affairs, and Joelle Stewart, Senior Vice President of Regulation, outlined the EBA's role in managing the costs associated with net power generation, which currently accounts for approximately 40% of the average residential customer's bill—up from 20% in 2021.

The EBA, initially authorized by the Utah commission in 2011, allows the utility to recover costs related to fuel, purchased power, and transmission expenses while offsetting revenues from excess generation sales. The process involves an annual filing on May 1, with a statutory review period of 300 days, longer than the typical 240 days for general rate cases. This year, Rocky Mountain Power is seeking to recover $455 million in variances from 2023.

Significant cost increases have been attributed to rising wholesale power market prices and natural gas costs, influenced by macroeconomic factors such as the war in Ukraine and extreme weather events. The utility reported a staggering rise in total net power costs from $1.5 billion in 2020 to $2.5 billion in 2023. Coal supply constraints, particularly due to a mine fire affecting local plants, have further exacerbated these costs.

In response to these challenges, Rocky Mountain Power has highlighted its participation in the Western Energy Imbalance Market, which has yielded substantial savings since its inception in 2014. The company is also exploring options to expand its market participation to further mitigate costs.

During the meeting, legislators raised concerns about the trend of increasing energy costs and the need for Rocky Mountain Power to implement measures that would incentivize cost reductions. Discussions included the potential restructuring of the utility's operations to better manage costs across its six-state service area, which includes Utah, Idaho, and Wyoming.

As the utility navigates these complex challenges, stakeholders are closely monitoring the implications for consumers and the broader energy market.