Summer electric bills for Utah residents aren’t just rising because of the heat. Rocky Mountain Power’s Energy Balancing Account rate has increased, driving up electricity prices even before a proposed rate increase from the utility is considered.

While residents await a decision on Rocky Mountain Power’s proposed 30.5 percent rate increase, the utility’s rates have risen exorbitantly on the Energy Balancing Account (EBA), a price adjustment that credits or debits consumers for differences between electricity prices and other market costs that the company has no control over.

To recoup about $455 million in deferred costs over a 24-month period, the Public Service Commission approved an increase in Energy Balancing Account rates of 11.6 percent overall, and 9.6 percent for residential customers, said David Eskelsen, a spokesman for Rocky Mountain Power.

“It covers the costs that the company incurred last year for supplying electricity to customers,” said Eskelsen. “These costs relate in particular to fuels for power plants, mainly coal and natural gas, as well as the costs of purchasing wholesale electricity.”

The Energy Balancing Account rate went into effect on July 1 with an interim rate. Now the Division of Public Utilities is about to launch an audit and examine Rocky Mountain Power’s books to determine whether the company acted prudently.

“These are expenses that the company has already incurred, and we can prove that these are actual expenses and that they are higher than what is currently covered by the fees,” Eskelsen said.

Next year, the tariff adjustment will take into account the costs for 2024 in addition to any balancing items identified during the audit.

The rate is high but routine, said Michele Beck, director of the Utah Office of Consumer Services. Normally there is an annual adjustment. However, this year’s increase was significant. For comparison, according to Eskelsen, there was a total increase of 4.6% for the Energy Balancing Account in 2023 and 3.8% for residential customers.

In theory, the adjustment could mean that money would be credited to users’ accounts. However, that has not been the case for some time.

The Office of Consumer Services has hired experts to analyze the rates and plans to make an initial statement to the Public Service Commission on Oct. 17, Beck said.

“We look at everything. There are many legitimate cost drivers, but I have never been in a case where we completely agree with the (proposed) case,” she said.

Unaffordable prices

Many Utah residents flooded the Public Service Commission with comments complaining about the charges. Some users said they expected a higher bill because of the heat, but their bills doubled compared to last year.

“My electric bill was only about $80 this time last year. Now it is expected to be $300 since there are fewer people living in the house and therefore using less electricity. This is unacceptable, my electric bill is no longer as affordable as it used to be,” one user said in a public comment.

Some described their electricity bills as “unaffordable” and described how they had run out of food due to the unexpected costs.

“Price adjustments are never welcome, but these represent the true cost of providing the service,” Eskelsen said of those comments.

He referred customers who are having difficulty paying their bills to Rocky Mountain Power customer service representatives who are familiar with state and federal assistance programs.

“We recognize the difficulties and are doing everything we can to keep our prices fair and reasonable. I would like to point out that the prices Utah customers pay for electricity are still among the lowest in the country,” Eskelsen added, arguing that the company expects to maintain that ranking as inflationary pressures affect other utilities.

Fewer tools

Before SB115 passed in 2016, the Energy Adjustment Account contained a spread where customers paid 70% of the adjustment and shareholders paid 30%. However, the legislation allowed electric companies to recoup 100% of their “prudently incurred costs in an Energy Adjustment Account.”

The 70:30 split was an incentive for Rocky Mountain Power and its parent company Pacificorp to control costs by sharing business risk with customers, according to a 2018 memo from the Division of Public Utilities.

“And here we are,” said Beck of the Office of Consumer Services. “And now we are actually going through a period of sharp increases in electricity prices that are happening all over the country. It’s not that we’re facing something that everyone else isn’t. It’s just that we don’t have all the tools that we used to have to deal with it.”

Although the company is operating within the framework of the laws passed, Beck said, “I think maybe it’s time we took another look at this.”

Price forecast

Effective immediately, Beck explained, customers will pay 2023 market costs through the Energy Balancing Account. But if Rocky Mountain Power is successful in its claim for a double-digit rate increase next year, that base rate increase – based on 2025 projections – will be paid through the Energy Balancing Account in addition to 2024 market costs.

“It feels like we’re paying the same price for different years at the same time, which is really tough right now when costs are rising so much,” Beck said.

The way the utility has designed this process is wrong, Beck said, as the increases continue to increase year after year.

“It is outrageous that this enormous increase is now taking place while at the same time they are requesting a 30% increase in overall tariffs,” said Beck.

However, the future of the Energy Balancing Account tariff will depend on whether the base rate increase proposed by Rocky Mountain Power is more realistic, Eskelsen said.

According to Eskelsen, the Utah utility last conducted a general rate adjustment in 2020 and “conditions have changed quite a bit.” With the rate resetting, the gap between base rates and electricity costs could close somewhat, he said.

Utah News Dispatch is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.

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