Citing increased costs of fuel and wholesale power, as well as investments in new electric transmission and generation projects, Rocky Mountain Power has proposed a controversial general rate increase.

By the end of the two-year rollout of the rate increase submitted to the Public Service Commission for review, customers will see an estimated 30% increase on their bills amounting to about $24 dollars per month.

The announcement by the utility company brought swift condemnation by Utah Gov. Spencer Cox, who vowed to make sure the increase “never sees the light of day.”

Rocky Mountain Power says its increase would result in an average overall customer increase of 2.31 cents per kilowatt hour and an average residential increase of 3.35 cents per kilowatt hour.

“We take our obligation to deliver safe, reliable and affordable energy seriously. We work hard to provide reliable service, make critical investments in much needed new energy infrastructure and keep rates affordable for customers. That work is reflected in quality service at rates that are below national averages,” said Dick Garlish, Rocky Mountain Power president.

“Like many businesses in these difficult economic conditions, the utility is facing inflationary pressures and increased costs outside of its control that cannot be offset through hard work and business discipline alone, making it necessary to seek a rate increase at this time.”

Significant capital investments in this request include the Gateway South transmission project and renewable generating resources, such as the Rock Creek wind project in Wyoming, which media there reported had been met with opposition from some groups and spurred litigation.

What do the proposed rates mean

The first phase of the increase, if approved as proposed before the Public Service Commission, would take effect Feb. 23, 2025, and amount to an overall increase for Utah customers of 1.32% per kilowatt hour. That would set the price per kilowatt hour at 9.50 cents. The second phase would jump it to 10.49 cents per kilowatt hour by Jan. 1, 2026.

Rocky Mountain Power says altogether, the average monthly increase for residential customers is $13.87 for the first phase and $10.27 for the second phase — amounting to $24.14 extra on the power bill.

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

The price of natural gas is also a factor. Henry Hub reports that the wholesale price of natural gas in the United States in 2022 was the highest since 2008.

As coal-fired power plants transition to natural gas or new plants are built that eschew the use of coal, natural gas remains a cleaner burning, viable option as a source of base load power, but it comes with market volatility.

Dave Eskelsen, spokesman for Rocky Mountain Power, said resetting “net power costs” is the paramount factor behind the rate increase as that reset has not happened since the last rate hike in 2020.

“Resetting the forecast is the reason the increase is as large as it is,” he said. The planned transmission lines are a mitigating factor in that reset, he added, because the wind and solar resources don’t have the fuel costs.

If both phases are implemented, residential customers will pay 14.31 cents per kilowatt hour. Historically, Utah electricity rates have been in the lower fourth of the nation’s electricity providers, Eskelsen noted. It’s too early to tell how these proposed increases might impact that, but Eskelsen said the challenges Rocky Mountain Power are facing are being replicated across the country.

“We are hopeful we will still be among the lowest in costs of electricity providers in the nation.”

With the rate increase proposal, Rocky Mountain Power is asking the Public Service Commission to authorize an overall increase of $667.3 million for recovery of the base revenue requirement, including excess liability insurance to be recovered as it relates to wildfire mitigation costs.

Logan Mitchell, climate scientist and energy analyst with Utah Clean Energy, said he is afraid the rate increase proposal is a harbinger of things to come given the state Legislature’s position of “doubling down” on the use of coal as a source of energy.

“I feel like there’s been an attitude in the legislature that we can just keep doing what we’ve been doing for years, for decades, and that’s going to keep our power low, but we’ve been delaying upgrades and and putting off investments in our grid for cleaner generation and modernization,” he said.

He, like Eskelsen, emphasized that clean energy investment in wind and solar will keep utility costs down because it avoids the cost of fossil fuel.

“It’s important to recognize investment does have costs, like we’re investing in wind and transmission, those are costs as well, but they’re the most important mitigating factor for volatile fuel prices,” Mitchell said. “So because we haven’t been investing as much over the prior years, that’s really created this exposure to volatile fuel prices, and it’s going to lead to really higher prices.”

He added that the state Legislature made clear it plans to hang onto coal despite the risk of rising consumer prices when it comes to electricity rates.

Mitchell pointed to the passage of SB224, which will deter new investment by the utility in clean energy generation in favor of the tradition of hanging onto fossil fuels.

Aside from the Gateway South and Rock Creek transmission lines, Mitchell said there are no clean energy investments in the pipeline for the next five years for the utility company.

“What I’m worried about is that this will cause us to miss an opportunity to build resources that are that are going to save us a lot of money,” he said. “In a very real way, this is the cost of climate change that we will now be paying for.”