Drought, heat wave in 2021 drive higher power costs

SALT LAKE CITY—In its annual adjustment, tracking the costs of providing power to Utah customers, Rocky Mountain Power has asked the Public Service Commission of Utah to approve an average increase to Utah customer bills of 1.9 percent beginning May 1, 2022. A typical customer using 775 kilowatt-hours per month would see an increase on their bill of about 1.6 percent or $1.40 per month.

Due to the severe drought and heat wave experienced by western North America in June and July 2021, actual power costs were much higher than the amount currently being collected through customer rates. The current request totals $40.2 million and utility regulators will audit the company’s filing over the next eight months, after which the commission will hold a hearing in December. This analysis may result in changes to the requested amount. The adjustment is scheduled to take effect May 1, 2022 for a period of 14 months, subject to a true-up based on the commission’s final decision.

Rocky Mountain Power forecasts what it expects the costs of producing electricity will be in the near future. This forecast of net power costs includes mainly the costs of fuel and power purchased on the wholesale market from other companies. These costs are tracked in a special Energy Balancing Account. Each year, when the actual costs are known, they are compared with the forecast. If costs are lower than forecast, a balance accumulates in favor of customers, and is later returned to customers as a bill credit. If costs are higher than forecast, a surcharge is applied to customer bills to recover what the company has already spent to provide service to customers.

The net effect of an Energy Balancing Account case can be an increase or decrease for customers, depending on conditions that are generally outside the utility’s reasonable control, plus other economic factors utility regulators may consider.

“Rocky Mountain Power is committed to bringing the best value to our customers for their hard-earned dollars,” said Joelle Steward, senior vice president of Regulation for Rocky Mountain Power. “As a provider of one of the most essential public services, we’re focused on controlling the costs we can control. As the cost of fuel and power purchased on the wholesale market changes, this annual adjustment continues to ensure Rocky Mountain Power customers always pay a fair and affordable price for the energy they need.”