Wyoming’s largest energy supplier sued state regulators Thursday claiming they wrongly reduced a rate hike by disregarding federal requirements.
Filed in U.S. District Court by PacifiCorp, the parent company of Rocky Mountain Power, the suit asks the court to overturn the commission’s January decision to approve only part of an electricity rate hike sought by the Oregon company, which is the largest utility operating in Wyoming. The complaint names Wyoming Public Service Commissioners Mary Throne, Christopher Petrie and Michael Robinson as defendants.
The Wyoming order is improperly costing PacifiCorp a $23 million loss, the company alleges.
Basis of the suit
PacifiCorp saw its rate hike request challenged by a group known as Wyoming Industrial Energy Consumers, which claimed the rate hike would force Wyoming customers to subsidize out-of-state users, according to the litigation.
The desire of consumers in other PacifiCorp states to choose or even require their utilities to secure some wind and solar power has chaffed coal-producing Wyoming, which has seen coal revenues dwindle.
“The [Wyoming Industrial Energy Consumers] adjustment relies entirely on a foundation of dislike and disregard for federal [power] reserve requirements.”
PacifiCorp
PacifiCorp alleges Wyoming regulators practiced “local protectionism” when they issued their rate-case order. The commission agreed with the industrial coalition that the energy company didn’t have to incorporate costs associated with holding reserves of power necessary to guarantee power supplies.
The Federal Energy Regulatory Commission sets those costs for power reserves, the lawsuit says, and the state agency can’t adjust or recalculate them.
Wyoming’s PSC created “an entirely new methodology for calculating the value of reserves and that methodology is directly contrary to federal law and FERC precedent,” the suit states. The Wyoming rate order unfairly shifts costs to non-Wyoming power users, the lawsuit claims.
“The Commission thus violated the Commerce Clause by engaging in clear economic protectionism,” the lawsuit reads, “and by seeking to burden out of state parties by creating and exporting a [PacifiCorp] revenue shortfall.”
How PacifiCorp sees it
Here are some of the descriptions PacifiCorp used in its filing to explain the dense and complex regulatory forest it operates in.
Instead of having a capacity and supplies for reserve power generation, the commission agreed with the industrial group that such resources could be sold to the benefit of Wyoming ratepayers. PacifiCorp said those would be “fictional power generation and sales that [PacifiCorp] could not possibly make while complying with federal regulations, which were promulgated pursuant to FERC’s exclusive jurisdiction.”
“The WIEC adjustment relies entirely on a foundation of dislike and disregard for federal [power] reserve requirements,” the suit states. The industrial group used a “methodology [that] is directly contrary to federal law and FERC precedent.”
In addition to declaring that the Wyoming commission exceeded its authority and ordering it to reverse its decision, the court should allow PacifiCorp to collect attorneys’ fees, costs and expenses and potentially “further relief.”
Another rate hike proposed
Last month, Rocky Mountain Power filed for a 12.3% rate hike for its Wyoming customers to cover, among other things, higher-than-expected fuel costs in 2023, WyoFile reported at the time. That would bump the typical residential customers bill by about $12 a month.
The size of last year’s proposed increases, meanwhile, sparked anger from customers and legislative action from state lawmakers.
PacifiCorp is the prime example of the unharnessed corruption that results when government sponsored monopolies are created and propagated. They have zero incentive to operate efficiently and fairly. In fact they are heavily incentivised to waste resources and human capitol because they can run down to the public service commission and ask for a raise due to their “inexplicable” cost increases. For the first time in recent history, they got their fingers slammed in the cookie jar with their nominal 28% rate increase request last fall. They are understandably disgusted with their unexpected rejection and are running to the courts for solace. Truly a corrupt organization that will certainly be bailed out by an even more corrupt court system.
As they say Wyoming is getting a piece of their own medicine.
From FERC to the state regulatory bodies, the system historically is anchored in an outdated model. It begins with the local central station powerplant and long distance transmission and distribution. The Utility companies built capacity and collected from utility customers to fund the system and have a regulated rate of return to fund their business. Now with oil, coal, natural gas and nuclear resources powering the system and discounts to large industrial customers, all bets are off as the we move away from fossil fuels. The costs of climate change worldwide are increasingly acknowledged.
Wyoming residential and commercial consumers are in the whipsaw of change. Wyo fighting change is like shooting yourself in the foot. “Slows you down and is painful.”
Simply stated, the elevated rates for Wyoming consumers (and many others) is based upon federal regulations and the insistence upon abandoning the use of inexpensive “fossil fuels” and mandating the implementation of expensive so-called “green energy” generators. I put quotation marks on “fossil fuels” since methane is a naturally-occurring carbon compound observable throughout the known universe; there are lakes of methane on Saturn’s largest moon, Titan, and most interstellar nebula are composed of methane, not associated with ancient carboniferous forests.
Very interesting article and kudos to Mr. Thuermer for presentation of a complex subject. Some aspects are hard to follow. Calculation of costs of power generation to supply Wyoming customers is not easy. It isn’t easy for Pacificorp and it isn’t easy for the PSC. The added complexity of federal regulations makes the lawsuit even harder to report.
Wyoming operations of Pacificorp produce a lot of electricity that is moved to customers in Idaho, Utah, Washington, Oregon and California. Those states and the federal government have been raising the costs of energy through green energy projects. In part, increased costs of Pacificorp are being asked to be paid from Wyoming citizens.
One has to ask… How has Wyoming added to the portfolio of green energy required by the west coast states? Wyoming has permitted wind and solar projects throughout Wyoming. Permitting is a very expensive process and could have been far more expensive without Wyoming help to Pacificorp. Wyoming entered into multistate agreements and made the permitting and easements far less complicated for Pacificorp. Often these projects were to the detriment of Wyoming’s pristine views and wildlife.
And how does this energy move from Wyoming to these western states? Well, Wyoming provided enormous financing through a little known part of state government called the Wyoming Infrastructure Authority which is now the Wyoming Energy Authority. Wyoming, using the power of our financial resources, can and did assist with billions of dollars of bonding authority for the Gateway West and Gateway South projects.
http://www.pacificorp.com/transmission/transmission-projects/energy-gateway.html
The vast majority of Pacificorp customers are in the western coastal states. Pacificorp needs the green energy provided by Wyoming wind, solar as well as energy from gas, and coal. And in the future, perhaps nuclear energy as well. The Wyoming legislature has been active in that arena as well.
Wyoming has made some vast investments into the production and transmission of energy that directly benefits Pacificorp and the customers of PacifiCorp. Those investments and opportunities to grow never were recognized in the financial accounting of lowered costs to California, Oregon and Washington customers. Yet Pacificorp would rather use litigation to force Wyoming to further fund the shifting costs of the green energy expansion to Wyoming ratepayers. The same ratepayers that fund a financially stable Wyoming government. The same ratepayers that often work to produce electricity in wind farms or in constructing the transmission lines, or in the fossil fuels energy sectors that produced decades of profits to Pacificorp. Wyoming has even used Abandoned Mine Lands funding to ensure stable footings for transmission line towers to rest upon.
Highly regulated companies such as Pacificorp enjoy nearly guaranteed profits by the regulators. Hence the very complex calculations done in the rate setting processes. The intangible benefits of having Wyoming as a partner in creating opportunities for Pacificorp green energy and transmission of that energy are not recognized by Pacificorp or the federal government. They should be.
No wonder that Wyoming customers are angry and Wyoming legislators wish to act.
I suggest Pacificorp calculate the risk of loss if Wyoming changed the regulatory system to match the Wyoming constitution.
Article 1, Section 30 Monopolies and perpetuities prohibited.
Perpetuities and monopolies are contrary to the genius of a free state, and shall not be allowed. Corporations being creatures of the state, endowed for the public good with a portion of its sovereign powers, must be subject to its control.
What if Pacificorp actually had to compete in a free market rather than with the PSC setting up regional utility monopolies? What if actually competing in a market had a risk of loss? Of course it always has that risk.
Or perhaps, Governor Gordon should instruct the WEA, DEQ, and LSO to compile an estimated cost of intangible assets transferred from Wyoming to Pacificorp and send em a bill!
I don’t blame Wyoming. Biden and his man made climate change farce sees his Chinese wind generators (why are THEY used, Hunter?) that have about a 3% reliability factor that all of the Biden suck up utilities jumped on that need consumers to make up for the costs of these windmills not making power. Wyoming residents have been and are calling Bovine Excrement on Biden’s complete lack of any command of the earth sciences. (Political science is not science; political science is a fancy name for a study of the methods for a keen ability to suck up to someone who can give you something you want.) Like the Biden precedent, the Wyoming residents should ignore any negative court ruling and refuse to pay basically anything regarding going from coal to wind or even worse, solar. Maybe as opposed to a dictatorship, the King of America will be forced to submit to the Will of the People of America and not entice utilities with taxpayer dollars into catastrophic decisions. If only Joe Biden acted like an American President and put the security of America above Hunter’s financial security Wyoming wouldn’t have to reject PacifiCorp’s consumer subsidy of PacifiCorp’s bad decision to throw reliable and cheap coal power away for expensive and unreliable Biden pushed Chinese wind generators and the even more disastrous solar energy.
Looky everybody believes in a company making a profit but how much of a profit should any company be asking for, you guy’s are wanting customers to pay for your upkeep but at the same customers are facing increases from everyone else gas, water, food, maintenance and so on not everyone gets a huge pay raise every year but when we do get one just like you guy’s come along and one to take away. As you will look up my name you will see we try to keep a credit for emergencies only but I’m afraid that with everyone wanting to keep raising rates every year I see us struggling in the near future like a lot of Americans we have always tried to pay our bills first then get what we need to survive on
Sounds like greed to me by the E provider. Just like everyone else wanting more money, I’m sure the blame game includes Covid somewhere. It’s a liberal ran company out of Oregon. That right there should tell you everything you need to know!!!
You’re not looking at this correctly, it has nothing to do with Biden or Oregon, and everything to do with the wildfire lawsuits (due to company mismanagement) and their oligarch’s money demands.
The current cost of electricity in Oregon is $0.16/kwh. That’s the national average. The current rate in Wyoming is $0.12/kwh. The proposed rate change would bring WY to $0.15/kwh… still lower than OR and most other states. I think some of the media has gotten it wrong when saying we pay the most in energy costs…they weren’t just meaning electricity, but that statement includes gas, too. We drive a lot. We need durable vehicles that use more gas than an Oregonian’s Prius. It costs more to heat our homes. Most of Oregon doesn’t get that cold.
But the greed doesn’t come from Oregon. Remember, it’s a company run by Warren Buffett, and he must have his annual $1,000,000,000. He owns about 10 other power companies and a heck of a lot more, amassing a net worth for himself of around $150 billion. Let that sink in. He could simply take less of a payday and let the company use that towards these expenses, but nope. He needs more. Demands more.
And let’s not forget why the company is cash-strapped. Back in 2020, when all of the leadership was off enjoying their Labor Day holiday, it was hot, dry and windy. Perfect conditions for wildfire. Other power companies shut off. This one did not, and leadership did nothing while Oregon and California burned.
The company is now up to $46 billion in lawsuits. Let that sink in. They are in a heap of debt and still hemorrhaging money. Things are not good.
The facts are, Americans need for electric energy will continue to grow. We, as a nation, are not prepared for it at all. Wyoming is rich in resources and is poised to benefit. I think this company overall is a bad bet for Wyoming and the entire regulatory system needs an overhaul.