Wyoming’s largest electric utility, Rocky Mountain Power, wants to hike prices by nearly 22%, a request that’s primarily driven by volatile natural gas and coal markets, according to the company.
It’s the largest rate increase request the regulated-monopoly utility has made in more than a decade, and it would result in an additional $16.42 per month for the average household customer, according to the company.
A hearing on the matter, including an opportunity for public comment, will take place from 5:30 p.m. to 7 p.m. Monday at the City Council Chambers in Rock Springs. The hearing will also be live streamed.
The proposed rate hike faces scrutiny from the Sierra Club Wyoming Chapter, Walmart, the Wyoming Office of Consumer Advocate and an industry group — all intervenors in RMP’s rate request. Though it hasn’t filed as an intervenor, AARP Wyoming requested the public hearing scheduled for next week.
“We just want to make sure it’s fair and reasonable and not a dime more than they need.”
Sam Shumway, AARP Wyoming
“We feel like [the proposed rate increase is] a little bit speculative,” AARP Wyoming Director Sam Shumway said. “We think this is higher than they actually need. The 21.6% is just astronomical.”
If approved as proposed, the new rates — which vary between residential, business, agricultural and industrial customers — would take effect January 1, 2024. The increase would generate an extra $140.2 million per year for RMP, which is part of the larger northwest power company PacifiCorp.
RMP’s rate case
Approximately 97% of the annual $140.2 million increase that RMP wants to capture from Wyoming customers is “related to resetting the new base for the Energy Cost Adjustment Mechanism,” according to written testimony by Joelle R. Steward, RMP’s senior vice president of Regulation and Customer/Community Solutions.
The ECAM is a formula to true-up the difference between forecasted fuel costs and actual costs for commodities such as natural gas and coal used to generate electricity.
Since 2020, “net power costs have been climbing annually at unprecedented levels,” Steward said, “driven by increases in regional market prices and fuel costs as well as new state and federal environmental compliance requirements.”
Historically, regulated utilities have split the risk of fuel cost adjustments with their customers in what’s referred to as a “cost sharing band.” In recent years, RMP was responsible for 20% of fuel-cost overruns while its Wyoming customers picked up 80%. In its current request, RMP wants to eliminate the cost sharing band to make Wyoming customers accountable for 100% of fuel cost overruns.
The company wants to ensure its profitability in Wyoming. Without the annual $140.2 million rate increase, RMP’s rate of return would be 1.32% — far below the maximum 9.5% currently allowed by the Wyoming Public Service Commission, the company said. RMP is currently proposing a maximum rate of return of 10.3%.
“[RMP] understands the impact that a rate increase has on its customers and the company is taking long-term actions that continue to position the company as a least-cost, least-risk utility through this changing energy landscape,” Steward said.
Separately, RMP has asked the Wyoming Public Service Commission for a limited-time rate increase to cover $50.3 million in unexpected fuel costs and wholesale power purchases as the result of heat waves, extreme weather and drought in 2022. That request is still pending.
Regulators granted the company a 3.8% energy cost adjustment totalling $23.6 million in 2022, citing extreme weather events in 2021.
Fossil fuel risk
Though PacifiCorp plans to gradually eliminate coal and add more sources of renewable and low-carbon energy to its power generation portfolio, the company is still exposed to wild commodity swings in fossil fuels. The company has known the risks of relying on fossil fuels for a long time, and it shouldn’t be allowed to completely shift that risk to its customers, Sierra Club Wyoming Chapter organizer Rob Joyce said.
“The company is basically saying they can no longer accurately predict these markets for things like coal and natural gas,” Joyce said.
Equally worrisome, Joyce said, is the fact that the company plans to add more natural gas to its energy mix. Several of the coal units it plans to decommission will be converted to natural gas.
RMP essentially operates as a regulated monopoly. Wyoming customers don’t get to choose their electricity provider. It’s unfair, Joyce said, for that monopoly to saddle its customers with 100% of the fossil fuel market volatility risk when customers have little influence in how the company structures its energy portfolio.
“We feel it’s important to intervene and for folks to be engaged in these rate cases and the integrated resource planning that the company is going through currently,” Joyce said.
An extra $16.42 per month for the average household is a big deal for many residents in the state, AARP Wyoming’s Shumway said.
“The reality is, as many of our members live on fixed incomes, that’s a chunk of change,” Shumway said. “That’s an extra $200 a year that somebody is going to have to come up with in addition to what they’re already paying for their utilities.
“Whatever the rate increase is,” Shumway added, “we just want to make sure it’s fair and reasonable and not a dime more than they need.”
Pacific Power/RMP are low on the learning curve when it comes to resource mgt., technology investment and customer care.
I have been a RMP rural customer for decades with neighbors in the same community, who are zoned in another utility’s district and I can compare.
There is a difference, and believe me no increase is what RMP requires.
Rewarding corporate short-sightedness is a mistake. And burdening customers with expenses they do not need is worse.
WY rate setting regulators need to recognize that they dont need to heel to utility/energy company’s rate demands especially when RMP has done far to little to look to the future.
Why is RMP, a regulated utility, allowed to “earn” a profit margin of over 10%? Grocery stores have an average profit margin of 2-3%. Seems to me that Warren Buffett (chairman of Berkshire-Hathaway, corporate owner of PacificCorp/RMP), the 4th or 5th wealthiest person in the US, could stand to garner a smaller profit and still survive. I’m not arguing that RMP should be non-profit, but it doesn’t need to be 10% profit while Wyomingites freeze. RMP doesn’t need hundreds of millions while ratepayers adjust their thermostats downward toward 60 degrees in winter to avoid hunger.
you have got that right. gill bates and Warren buffett have been allowed to make their own rules in Wyoming. where is the current of the gov mansion.
Our electricity bill is close to $400 per month in the winter and we have no choice but to use electric heaters. The price increase would be a lot more than $16 per month for us, and it’s not a cost we can afford. Seems to me like maybe a new power company should take over Wyoming if RMP is going to be forcing people to choose between freezing to death or being homeless AND freezing to death. Scumbag behavior.
$16.42 per month? We are renting a place that is all electric. Our monthly winter bills average $400 per month. Definitely more with a winter like we just had. I did the math. $400 x 21.6% = $86.40 EXTRA per month! How can we afford that? Are they literally trying to kill us?
MORE COMMON SENSE!!! The Town of Lusk is actually part owner of the Wheatland power plant along with a few other Wyoming towns – this means they get electricity directly from the Wheatland power plant at rock bottom prices. and what an affect!!! Not only does the town have cheap electricity, but they own the power lines in town and administer electricity distribution themselves. Therefore, the town makes a modest profit off of electricity and uses those funds to pay for health insurance and other expenses for town employees which they normally couldn’t afford. All because someone years ago had common sense and positioned Lusk to have cheap, cheap electricity for many years in the future.
Contrast this situation with Rocky Mountain Power making incompetent decisions that hang excessive electricity costs on many citizens in Wyoming – and there’s nothing we can do about it. At least in Lusk the Mayor and city council are elected. Its impossible to replace the RMP executives that made this mistake – they’ll go right on collecting their huge salaries at our expense of course.
Wouldn’t it be nice if we could vote them out – but we can’t – so we’ll have to pay up.
INCOMPETENT MANAGEMENT!!!! RMP made a huge mistake by not entering into long-term natural gas purchase agreements a few years back when natural gas prices plummeted below $2.00 per mcf. I remember years ago when the Kansas City regional natural gas company locked in gas for 30 years at about $1.00 per mcf thus guaranteeing their customers low rates for 30 years!!! Now thats how its done folks. The commodity futures markets can even be used to contract forward – purchase – natural gas when prices are low.
Another example – a company called Spring Creek Coal had sold good quality Sheridan coal on a long term contract at about $7.00 per ton with CPI escalation built in. Just before the mine was scheduled to be built, the price of coal dropped to about $2.25 per ton – rather than build the mine – Spring Creek purchased coal from Gillette mines for $2.25 and had it shipped to their customers for $7.00 and never had to spend the $250 million to build the spring Creek Mine!!! Brilliant. They knew what they were doing and had competent upper management.
In my experiences, farmers and ranchers follow the commodity market on a DAILY basis and commonly will not sell/ship their ag product until prices rise. Not so with your energy supplier such as RMP, they don’t have the common sense that your average farmer/rancher has. I have a cousin in South Dakota that built a climate controlled potato storage facility – he stored potatoes that normally sell for about $3.75 per hundred weight until prices rose to $23.00 per hundred weight – a huge price rise due to flooding in the Red River flood plain in eastern North Dakota.
A huge mistake on RMP’s part and now they are asking us to pay for it – but that’s how the system works.
Witness the huge mistakes that Budweiser and Target marketing “experts” made by promoting woke products. A college education in marketing/advertising means nothing if you don’t have practical common sense – are you listening RMP??