Rocky Mountain Power seeks $104M deferral for wildfire insurance costs in Utah

In a pivotal government meeting on March 23, 2025, discussions surrounding Rocky Mountain Power's (RMP) rate case revealed significant concerns about the allocation of wildfire liability costs. The focus was on the company's use of the Excess Liability Insurance Premium (ELIP) allocation method, known as the ESO factor, which has been a point of contention among stakeholders.

Chairman Powell highlighted the ongoing commitment of RMP to engage with various parties to develop a more suitable allocation methodology. The current ESO factor, while historically used, has faced scrutiny for not adequately reflecting wildfire liability risks. RMP representatives acknowledged that while the ESO factor has been a consistent method for cost allocation, it may not be justifiable in the long term without a more principled alternative.

During the meeting, it was emphasized that the ESO factor's continued use could lead to unjust rates for consumers. Critics argued that relying on this outdated method until a new agreement is reached could undermine the fairness of the rate-setting process. RMP's representatives maintained that they are actively working on a comprehensive proposal to address these concerns, aiming for a new allocation methodology that aligns with the policies of the six states they serve.

The meeting also addressed RMP's request for deferral of $104.4 million in incremental costs associated with wildfire liability insurance. This request is tied to the company's ongoing efforts to manage rising insurance premiums, which have increased significantly since the last rate case. The breakdown of these costs was discussed, with RMP seeking to clarify how these figures relate to the overall rate structure.

As the commission prepares to evaluate RMP's proposals, the discussions underscored the urgency for a durable and principled approach to cost allocation that reflects the realities of wildfire risks. Stakeholders await further developments, as the commission is tasked with ensuring that all rates remain just and reasonable for consumers. The outcome of these deliberations could have lasting implications for how utility costs are structured in the future.