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April 15, 2014

Fairness to Customers: It's the Rocky Mountain Power Way

We’ve recently received numerous form letters critical of Rocky Mountain Power on three fronts: 1) our proposed net metering fee for customers who generate their own power using solar panels or other technologies, 2) the company’s use of coal and, 3) questions about our commitment to renewable energy. We would like to explain more about these issues for the benefit of those who have expressed concerns and for all customers.

Net metering fee

Our proposed $4.25 monthly charge for residential net metering customers in Utah is not a “penalty” but actually a step to promote fairness for all customers. We’ve also proposed increasing the customer service charge for all residential customers in the state from $5 to $8. These changes are aimed at having prices that reflect the actual cost of serving customers and to avoid having one group of customers subsidize another.

The cost of being connected to and using the power grid should be the same for all residential customers, whether they have solar panels or not. The fixed costs to build, operate and maintain the local poles, wires and other equipment don’t change based on a customer's monthly energy use. Whether you use a little electricity or a lot, this equipment is always necessary to provide dependable electricity whenever you need it, day or night. See our infographic (PDF) for information on how traditional and customer-owned generation systems provide energy for your morning breakfast.

Solar panels

Customers who generate their own power, however, are not currently paying their fair share of these fixed costs. This is because the structure for residential electricity prices was created decades ago when most people used similar amounts of power in their homes. Times have changed and electricity use in homes now varies widely.

Unlike businesses, residential customers don’t pay a separate “demand charge” to cover their fixed costs. Rather, they pay a relatively small customer service charge in Utah, leaving most of the fixed costs to be collected in energy charges. Increasing the customer service charge from $5 to $8 would help level the playing field by tying less of these fixed costs that exist for all customers to the amount of energy they use in a given month.

Similarly, because customers who generate their own power generally have much lower energy charges, the actual fixed costs of serving them aren’t represented on their bill, despite their reliance on constant access to the power grid. Instead, these costs are subsidized through higher electricity prices for other customers, including customers in lower income households.

The net metering fee would help make it so everyone pays for what they actually use. Concerns about the fee slowing the growth of solar energy in Utah are misplaced. While no one wants to pay an additional fee, we have learned in other states that customers who are willing to invest to install solar panels likely won't change plans because of a monthly charge if state utility regulators determine it is justified to ensure a reliable power grid whose fixed costs are shared fairly.

Why Rocky Mountain Power still uses coal

Coal

Coal has been an important part of our resource mix to provide low-cost, reliable electricity for decades. However, dependence on coal will continue to decrease as coal-fueled power plants are eventually retired or converted to natural gas. As always, these decisions are made with the best interests of our customers in mind and based on thorough analysis and with public input. While coal is expected to provide 61 percent of the energy for our customers this year, it is projected to be only 46 percent of our energy mix in 2024.

Our company has always complied with emissions control regulations and will continue to do so as long as it makes economic sense for customers. We are also continuously developing and implementing strategies to improve our emissions performance. Here are some examples:

  • We have spent $1.4 billion between 2005 and 2012 to reduce emissions from coal-fueled power plants.
  • Since 2005, we have invested in pollution control technology that has reduced emissions by: 58 percent for sulfur dioxide; 4 percent for nitrogen oxide; and 10 percent for mercury.
  • We spent $400 million on emissions controls at coal plants in Utah to reduce regional haze and will spend $900 million between now and 2022 to further reduce regional haze. 

All of the company’s coal-fueled plants are located in areas with good air quality and none contribute in any substantive way to adverse air quality along Utah’s Wasatch Front. The biggest pollution factor on the Wasatch Front is automobile emissions.

Our commitment to renewable energy

Wind

No organization in Utah has done more than Rocky Mountain Power to make renewable energy sources available to customers in Utah. We've demonstrated our commitment to renewable energy for many years and will continue to increase the renewable energy choices available for our customers. Some examples include:

  • We’ve operated renewable hydroelectric generation plants for more than a century.
  • Our Blundell geothermal plant was built in the 1980s and was expanded in recent years. It was the first geothermal electric generating plant in the country, outside of California.
  • Through our Blue Sky program, participating customers have supported renewable energy development in the region for more than a decade. They’ve also helped fund more than 100 community-based renewable energy projects in Utah.
  • Our Utah Solar Incentive Program is providing $50 million over five years to help customers install solar panels on their homes and businesses.
  • Rocky Mountain Power is the second largest rate-regulated utility owner of wind power in the U.S., just behind our sister utility, MidAmerican Energy in Iowa.
  • In partnership with our Blue Sky customers, Rocky Mountain Power will be building a solar farm in Utah that will produce enough energy for 500 homes.
For more information, read our Utah Conservation and Respect Report 2014 (PDF).

Final thoughts

Our customers’ enthusiasm for solar power in Utah is admirable, but many other groups are urging Rocky Mountain Power to do whatever it takes to keep energy costs down and keep power reliable. We will continue to work toward the most sensible energy policies for Utah and the other states we serve. Rocky Mountain Power is engaged with state regulators about the various options and their costs to customers, but ultimately we carry out the policies that each state determines.

 

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