Rocky Mountain Power wants 30% increase in Utah electricity rates by 2026.

The historic new rate requirement would cost most Utahns hundreds of dollars a year, damaging Utah’s reputation for cheap energy.

Rocky Mountain Power, which supplies electricity to four-fifths of Utah, is asking the state for a massive 30.6% power rate hike that will raise the average customer’s bill by more than $24 per month over the next 18 months.

In its Friday filing with the Utah Public Utilities Commission, Rocky Mountain is proposing a two-phase increase, which must be approved before it goes into effect. The first phase would occur in February 2025, when the rate for residential customers would increase from 10.96 cents per kilowatt-hour to 12.89 cents.

According to the company, this would increase the average customer’s bill by $13.87 per month.

Then, in January 2026, there will be another jump when the rate increases to 14.31 cents per kilowatt-hour, causing the average customer bill to increase by another $10.27.

Business and industrial customers would also see a large increase, but the percentage increase would be smaller.

Rising fuel prices

The energy company, which is part of PacifiCorp and owned by Warren Buffett’s Berkshire Hathaway Energy, cited rising fuel costs and the cost of new infrastructure as reasons for the historically strong growth.

Both coal and natural gas, which together supply most of Utah’s energy, have seen big price increases and more volatile markets in recent years. Coal, in particular, has become harder to obtain as mines have closed.

The price of natural gas in Utah has remained stable for more than a decade but has nearly doubled in the past three years amid greater price volatility.

“Like many businesses in these challenging economic conditions, the utility is facing inflationary pressures and cost increases beyond its control that cannot be offset by hard work and business discipline alone. As a result, it is necessary to seek a rate increase at this time,” Dick Garlish, president of Rocky Mountain Power, said in a statement.

In terms of new infrastructure, Rocky Mountain cited the Gateway South power transmission project, connecting a wind facility in Wyoming with a facility in Sigurd, Utah, as well as the Rock Creek wind project in Wyoming.

“Rocky Mountain Power does not take this request lightly, and we are committed to continuing our efforts to provide reliable service, reduce the impact on customer bills, and make much-needed investments in energy infrastructure that is the foundation of economic development in Utah,” Garlish added.

More in the future?

And the stakes may be even higher. This rate request does not include funding for the special wildfire mitigation fund created this year by the Utah Legislature. Under SB224, Rocky Mountain can charge up to $3.70 per month to Utah residential customers to fund a self-insurance account that can be used to pay claims for catastrophic wildfires in Utah after Rocky Mountain’s insurance has been exhausted.

Rocky Mountain parent company PacifiCorp is struggling to finance potentially billions of dollars in wildfire claims in Oregon, where it was found liable by a court for a major 2020 blaze caused by power lines the company failed to shut down when the fire threat was extreme. The company has also faced skyrocketing insurance costs that it wants to pass on to taxpayers in several states, including Utah.

The wildfire fund appears to be helping to reduce the company’s legal exposure, and Greg Abel, who is considered a likely successor to Buffett at Berkshire Hathaway, has praised the Utah legislation that created it, calling it the “gold standard.” But the company has yet to file paperwork to create the fund.

With or without the wildfire fund, the state could lose its bragging rights as one of the cheapest states for electricity. The proposed 2026 rates of 14.31 cents per kilowatt-hour would put Utah somewhere in the middle of the current energy cost rankings by state.

But rates are rising virtually everywhere in the country and the cost of electricity is outpacing inflation, so it’s hard to say where Utah will rank in the future rankings. (The statewide figure also includes the 20% of Utah that gets its power from municipal power systems and rural electric cooperatives.)

New carbon law?

The same legislation that allows for the creation of a self-insurance fund for wildfires gives Rocky Mountain more leverage to pass on the costs of maintaining two coal-fired power plants in Utah. When the bill was being discussed, ratepayer advocates expressed concerns that favoring coal would likely lead to higher rates as other, cheaper sources became available.

However, this rate request does not appear to transfer any new costs that were not permitted prior to the passage of the Act. The financial impact of this legislation will likely be evident in future interest rate cases.

Friday’s filing kicks off a months-long review process by the Public Service Commission, and the company won’t necessarily get everything it wants. The review will include scrutiny from residential ratepayer advocates at the Utah Bureau of Consumer Services and industrial ratepayer advocates at the Utah Energy Users Association, among other watchdog groups.

Last year in Wyoming, Rocky Mountain asked for a 21% increase and received only 8.3%. But it later went to the Wyoming Public Service Commission asking for more rate increases.

Maintaining constant profit

As with all rates, the company also factors in what it wants as profit or “return on equity.” Essentially, the Public Service Commission has to decide how much money Rocky Mountain Power can make from its Utah customers. In this case, the company is trying to maintain its current return on equity of 9.65%.

Rocky Mountain also reminds customers of its various assistance and efficiency programs. It offers a bill assistance program for low-income customers and has incentives for the efficient use of appliances and home improvements.