A 21.6% electric rate hike request panned by customers and politicians as an unjustified threat to households and the state’s economy will be scrutinized beginning Wednesday at a multi-day, court-like hearing before the Wyoming Public Service Commission.

The high-profile and historic rate hike from Rocky Mountain Power — the largest proposed increase in Wyoming in more than 10 years — would tap some 144,000 households and businesses for an extra annual $140.2 million. 

Another Rocky Mountain Power electric rate hike — a one-time $50.2 million fuel cost adjustment over 12 months — was temporarily imposed on customers in July but awaits potential modifications and final approval by the commission later this year.

Combined, the average Rocky Mountain Power household would see a monthly increase of $19.94 beginning in 2024, the company estimates. Some critics claim that’s a low-ball estimate.

Wyoming Public Service Commission Attorney Supervisor Ivan Williams and Chairman Mary Throne listen to public comment at a hearing in Casper on Aug. 24, 2023. (Dustin Bleizeffer/WyoFile)

Regardless, the overall 29.2% increase, according to hours of public comment in recent weeks, might force some businesses to close their doors, prevent new businesses from coming to Wyoming, push more households to become reliant on under-funded public utility assistance programs and even threaten the health of residents who can’t afford higher utility bills.

The proposal has attracted the ire of lawmakers who doubt the utility’s intentions and instead blame its increasing investments and reliance on renewable energy for the rate hike. The Corporations, Elections and Political Subdivisions Committee has proposed a slew of draft bills its members say will help protect Wyoming ratepayers from increasing utility costs. The committee will review seven draft measures when it meets Friday in Cheyenne.

The utility’s justification for the increases is primarily mounting costs related to coal and spiking natural gas prices in response to weather extremes likely to continue due to human-caused climate change. Observers note those factors are not necessarily unique to Rocky Mountain Power. The same market conditions, extreme weather implications and an ongoing utility industry shift from fossil fuels to renewables will also factor in myriad rate cases to come.

With so much at stake, the commission faces an unprecedented level of scrutiny and interest from residents and elected officials alike. And much of the public is, for the first time, peering into an obscure corner of a regulatory bureaucracy laden with clunky statutory guidelines and procedures, all carried out in a language of acronyms and wonky utility legalese that, frankly, isn’t easy to follow.

“Wyoming is watching. We want the Public Service Commission to know that we oppose this and we’re watching what you do.”

Sam Shumway, Wyoming AARP

“It will be interesting and, at the same time, confusing,” Public Service Commission Chief Counsel John Burbridge said of the upcoming hearing. “Honestly, having been doing this for so long, it takes years to figure it out.”

At the conclusion of the hearings, the commission will take several days or weeks before convening to publicly deliberate possible modifications regarding the rate hike. Intervening parties may also negotiate an agreement with Rocky Mountain Power to modify aspects of the general rate. The commission is expected to make a final ruling before the end of the year.

In response to the magnitude of the case and the scope of interest, the commission held five public hearings in four towns (you can access audio recordings of those meetings here), in addition to commission members appearing before several legislative panels to answer questions from state lawmakers.

The hearing will take place at the commission’s headquarters in the Hansen Building in Cheyenne. It will be open to the public and live-streamed with opportunities for more public comment. (See more details at the end of this story.)

‘Pretty simple’

The commission, Rocky Mountain Power and the five intervening parties in the case are mostly relegated to arguing the merits of the proposed 21.6%, $140.2 million “general rate case.” 

The parties, along with dozens of their witnesses, will rehash the contents of pre-filed evidence, analysis and motions. The utility’s claims regarding cost of services and market conditions — past and projected — along with its proposals for how to balance future cost risks between its shareholders and its customers will be scrutinized over several days.

In fact, the commission has set aside eight days for the hearing and it will go for as long as it takes, according to staff.

Shannon Anderson is an attorney for the Sheridan-based landowner advocacy group Powder River Basin Resource Council. Although her organization is not involved in this case, Anderson has taken part in several electric utility rate hearings.

Determining what is the most reliable, inexpensive strategy for providing electrical service is not easy, she said, especially in an industry that is rapidly transforming and responding to a changing natural environment.

“It is a very difficult thing to puzzle out,” Anderson said.

Though the hearing process is unfamiliar to the general public and riddled with procedure and legalese, it’s designed that way to get at the facts of a case. But the general public shouldn’t be discouraged or intimidated, Anderson and several other sources familiar with the process told WyoFile.

Sure, there will be a lot of dense monologues regarding utility costs, system operations and western grid dynamics, along with nitpicking cross-examinations. But there will also be several value judgements that are not so complex and which the commission has broad authority to rule on. Those come down to how to balance cost risks between a regulated, monopolistic utility and its captive Wyoming customers.

“They [utilities] say, ‘Oh, these cases are so complicated and involve so many moving parts that the general public just doesn’t understand,'” AARP Wyoming Director Sam Shumway said. “What I do understand, and what I think the public understands, is they’re asking us to pay to make sure their shareholders get a double-digit rate of return. That’s pretty simple.”

Reality versus risk

Rocky Mountain Power’s continued reliance on coal and natural gas to generate a portion of its electricity is responsible for the bulk of its rising expenses, given recent price volatility in those commodity markets, according to filings by the company

The company might place significant weight on coal and natural gas prices to justify the temporary 7.6%, $50.2 million cost adjustment to cover a cost overrun beyond what the Public Service Commission approved several years ago for its current “general rate.” Also, such year-to-year adjustments are considered a “pass-on” — the utility isn’t permitted to earn a profit on that $50.2 million. 

But factoring coal and natural gas market volatility into its proposed new general rate — the focus of the upcoming hearings — might be more difficult.

About 90% of the company's proposed $140.2 million general rate hike request for future expenses is based on the same market volatility for coal, natural gas and electrical power it might purchase in coming years, company officials have testified.

Those volatile market realities, however, don't necessarily mean the utility can pass the cost onto ratepayers in a new general rate. By law, the Public Service Commission must provide regulated utilities the "opportunity" to earn a return, even a profit, on investments to meet their mandatory requirement of providing reliable service to Wyoming customers. That opportunity is not a "guarantee," Public Service Commission Chairwoman Mary Throne has repeated in recent months.

For example, the utility's ongoing additions of renewable sources of energy — along with federal production tax credits — have saved Wyoming ratepayers an estimated $85.4 million or more, according to the company. That's $85.4 million that might have otherwise been added to the $140.2 million rate hike request.

The commission, according to insiders, could decide that's an indication that the utility hasn't moved fast enough to replace fossil fuels with renewable sources of energy. Therefore, the utility might not be entitled to tap ratepayers for its full $140.2 million request. Or, the commission may find that the utility is doing a fine job of balancing the risks, rewards and reliability of wind, solar, coal and natural gas resources in its customers' favor.

That's one aspect — albeit complex — of how the commission might weigh Rocky Mountain Power's general rate hike request.

In perhaps more of a fairness determination, according to Wyoming AARP (which is not an intervening party in the case), other aspects of Rocky Mountain Power's request come down to how the utility proposes to share risks and rewards between its shareholders and its Wyoming customers in the future.

Couched within the $140.2 million rate increase is a proposal to eliminate a fuel "cost sharing band." Currently, Rocky Mountain Power is responsible for covering 20% of fuel cost overruns. Its customers in the state are tapped for the rest. The company says it should have zero liability and Wyoming ratepayers should pick up the entire tab.

Rocky Mountain Power is also asking the commission to increase its maximum allowable rate of return — or profit. Currently, Rocky Mountain Power — the state's largest single electric utility, a division of PacifiCorp owned by billionaire Warren Buffet — is allowed a maximum 9.5% rate of return on its investments in Wyoming. It's asking to bump that up to 10.3%, according to the company's filings.

The company claims it might earn a profit of only 1.32% in Wyoming if it isn’t allowed the full $140.2 million annual rate hike.

Wyoming AARP's Shumway said he and his 75,000 members — more than 5,000 have submitted written comments in the case, he said — will be watching closely to see how the commission balances those risks and rewards between the utility's shareholders and its customers in the state.

"An almost 30% rate increase is going to be devastating for older Wyomingites and for all Wyomingites," Shumway said. "Wyoming is watching. We want the Public Service Commission to know that we oppose this and we're watching what you do. The Public Service Commission's job is to put the interests of the public first and the interests of the utility are secondary."

How to watch, participate, learn more

The hearing will take place at the Wyoming Public Service Commission's headquarters in the Hansen Building, 2515 Warren Ave., Suite 300, in Cheyenne beginning at 9 a.m. Wednesday. It will continue at 9 a.m. each following work day through Nov. 3, at the commission’s discretion.

The hearing is open to the public and will be livestreamed — click here for the livestream link, or dial 1-719-359-4580, meeting ID: 819-2930-6120. There will be opportunities for public comment throughout the hearing.

Dustin Bleizeffer is a Report for America Corps member covering energy and climate at WyoFile. He has worked as a coal miner, an oilfield mechanic, and for 25 years as a statewide reporter and editor primarily...

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  1. Regarding the residential rate chart: Why is there such a huge difference between Wyoming providers? It appears that Powder River customers pay twice as much as Lower Valley customers.

  2. The airlines seem to get it right and Rocky Mountain Power gets it wrong. Business Class pays more for a ticket. Rocky Mountain Power charges businesses half the rate that those of us in “Coach” pay.

  3. First- rate reporting, Dustin. You’ve managed to wrestle a convoluted subject into readable pros. Every ratepayer in Wyoming, which means practically everybody, should read this.

  4. The next request will be to fund battery terminals to store the intermittent wind and solar power. Just look to Colorado and what Xcel Energy is doing there. Shutting down coal-fired plants before end of life, charging for the decommissioning, expanding wind, solar and transmission projects with a guaranteed 10.2% profit. This is legalized stealing at the rate payer’s expense.

  5. We are at a very interesting time for electric utilities across the country. The simple mental model that most of us have in our heads “utility-scale wind and solar generators are expensive, but good for the environment – while fossil generators are cheap, but not-so-good for the environment” is getting further from reality now that wind and solar have achieved the economies of scale that have long been promised. This is combining with the fact that wind and solar generators have no fuel cost, while fossil generators expose customers to the potentially volatile cost of coal and natural gas. We are used to volatile gas prices, since many of us live in or near boom-and-bust communities, but we are used to coal price being stable and low.
    Our work in Wyoming seems like it will consist of two things: 1. Take advantage of the cheap power available from wind and solar that we are used to exporting to other territories while figuring out what to do with stranded fossil assets that does not waste ratepayer money – and 2. Ensure that power stays reliable with higher levels of wind and solar penetration.
    We should encourage broader participation not just in rate cases like these, but in the integrated resource planning proceedings that determine the Utility’s strategic planning around future generation. Sensitivity, cost benefit, and capacity expansion analyses often show how exposed customers are to these future dynamics before they happen.

  6. This is ridiculous! That works out to $972 per year per customer. That is an $81 increase per month! This opens the way for other Wyoming utilities to do the same. Wyoming DOES NOT have the “rich” customers to support this.
    Ardis Kenney
    Dayton, WY