The Utah Legislature is not happy with Rocky Mountain Power.
It started this summer when the state’s largest utility proposed a rate hike of more than 30%. It was later reduced to 18.1%. That’s when lawmakers asked the provider for a plan to separate from its Oregon-based parent company, PacifiCorp.
The PacifiCorp subsidiary covers customers in Utah, Idaho and Wyoming, while Pacific Power serves customers in California, Oregon and Washington. In Utah, Rocky Mountain Power covers roughly 75% of the state and has more than 1 million customers.
The company delivered a 22-page report to the Legislature during a Nov. 20 interim session. It outlined what a future “corporate realignment” could look like, as well as the financial and regulatory hurdles the process would entail.
State laws and regulations about energy and the utilities industry across those six states vary widely. Some want a greener energy plan. Others, like Utah, are friendlier to coal and natural gas. Some Utah lawmakers believe those disparities lead to volatile rates and less reliable power.
That disparity has led to headaches not just for lawmakers, but utility leaders as well.
“What that has created is an environment where all of our regulatory processes, because we have to go before all six state commissions to recover our costs, it's just created an environment where we’re being whipsawed,” Rocky Mountain Power President Dick Garlish told the committee.
“Everybody's trying to maximize benefits and minimize burdens, but it's along the way that balancing is not happening.”
Despite the complexities of a separation, Garlish said a future split “could be part of the solution” to frustrations seen across the greater PacifiCorp system.
“It's a generational energy policy discussion that's being begged here.”
The speed of that discussion is what irks some lawmakers.
Rep. Carl Albrecht and other Republicans crafted legislation this year that would protect coal assets, including those owned by Rocky Mountain. He said there's a lot of frustration when it comes to the utility company.
“When you came out with your [Integrated Resource Plan] a couple years ago that said you were going to go to renewables and batteries and so forth, it upset this group, it upset [the public utilities committee], it upset the public to a great extent,” he said. “We said, ‘No, we've got plenty of coal. We've got coal plants. We want you to stay with coal.’”
PacifiCorp’s 2023 bi-annual plan touts future investments in solar and wind production. The original version also announced that two of the state’s coal plants in Emery County would close early in 2032. However, The U.S. Supreme Court temporarily blocked the Environmental Protection Agency’s “good neighbor” emissions rule, leading the company to backpedal on that decision and reinstate the original closing dates of 2036 and 2042.
“As a customer, I'm concerned about where you're going,” Albrecht said. “I helped you with a bill last year, and now it seems like we've been stabbed in the back.”
In response, Garlish told the committee the decision to split would not be an easy or cheap process. Just taking over the current mortgages on PacifiCorp assets “could be anywhere between a billion-and-a-half and $4 billion in costs,” he said.
“I am the leader of Rocky Mountain Power, but I have a boss,” he said. “I have the CEO of Berkshire Hathaway Energy, who has a boss, who's the chairman of Berkshire. So there are some things that are above my pay grade, but what I can do is I delivered this report, and I'm here to have this conversation.”
A future split from PacifiCorp would also involve more than just Utah stakeholders, Garlish pointed out. The six states that the company serves and the owner are in a partnership. And if there was political will to split up, he said, those discussions would happen at that level.
Some Democrats did voice concern over the potential for unintended consequences if Utah did push forward with pursuing a split between the two companies. Rep. Joel Briscoe pointed out that any large costs incurred by Rocky Mountain Power because of a split with its parent company would likely be passed onto Utahns in some way.
“Our rates would increase in order to pay off this cost,” he said. “We would have to weigh on our side, whether the increased cost to Utah ratepayers would be worth what we would gain from buying out those assets ”
Despite the frustration of some committee members, Republican Sen. Scott Sandall said further pursuit of a split should originate in the political arena.
“All of the symptoms that have been discussed and the concerns are valid and real,” he said. “But the real problem, to me, is we need to get the highest politicians involved of the six states, and at least have that discussion of how we're going to do this. I think it's as much a political move as it is a company move to try to break this up if that's the decision and that's the way we're going to want to go.”
Committee members asked Garlish to return to the Legislature in the future with steps they can take to separate from PacifiCorp.
Garlish indicated the company would participate in any future discussions because “if we stay on this track, we're all going to continue to be frustrated with the situation and each other.”
