Rocky Mountain Power Average Rates and Inflation
The moon seems to float over a power line tower in Spanish Fork Canyon where electricity flows to the Wasatch Front. Rocky Mountain Power says that maintenance on lines like these, power plants, other infrastructure and expansion of the service area is almost impossible based on current electric rates. The utility claims it is putting much more money into the system each year to operate it than it is getting back from rate payers.
In a presentation to the Governor's Rural Conference on Feb. 3, Richard Walje, the president of Rocky Mountain Power presented information that if power rates continue to be depressed in the state of Utah, his company will be in big trouble.
That message was passed along to those attending the Carbon Economic Council meeting on Wednesday, as both Delynn Fielding, economic director for Carbon County, who attended the meeting and Deb Dull, the customer and community manager for Carbon, Emery, Grand and San Juan counties spoke about the situation.
"A (utility) company doesn't go through a number of owners in 15 years without having something wrong," said Dull to the gathered group. "Our company just doesn't get the allowances (in Utah) that the other five states we operate in give to us."
A powerpoint graph presented to the Governor's Rural Conference by Walje, presents what appears to be a good thing for consumers, but in the long run could be to their detriment. It demonstrates how since 1986 the rates for power supplied by Rocky Mountain Power has increased only slightly while the consumer price index has doubled. In 1985 the price consumers paid for power was 8.5 cents per kilowatt hour. Today the rate is slightly less than that.
"Having the cheapest rate for electric power is not good for our area," said Fielding. "Basically we are not feeding the horse."
While consumers may enjoy those low power rates, some of the lowest in the country, the money coming in is not covering the costs for maintenance, inflation and expansion of the supply system.
Fielding explained, Rocky Mountain Power's investors are spending $2 billion per year for a $1 billion per year return.
"That just can't go on forever," stated Fielding.
Rocky Mountain Power is a legal monopoly, which along with companies that provide land line telephone service and natural gas, were set up that way under the idea of protecting them while they provide what is called universal service.
Universal service, is the idea that every town and area should have certain utilities whether they be a large metropolitan area or a very rural town.
Universal service therefore places the cost burden of that expansion to rural areas and the cost of operating those systems on everyone who uses those services whether they be existing customers or new customers.
"You can call (on the telephone) New York from Emery town and New York can call Emery town," said Fielding. "That is considered a good thing, but the cost of supplying those lines to Emery would be too much if it were not for universal service."
For Rocky Mountain Power the problem is that Utah's public service commission controls the rates and over the years those rates have been kept down which appears to have been a victory for consumers. But Fielding says in the long run that will backfire.
"It wasn't long ago that the companies power systems in Utah had a 30 percent capacity," said Fielding, referring to the ability of the power system to supply more power. "Today it is down to nine percent. That puts us up against the wall for any expansion."
Fielding knows this well because as economic development director he has worked with many new businesses that have considered moving into the area. At least a couple of those businesses did not come here primarily because the electrical infrastructure did not exist to supply their electrical needs. For many that is an ironic turn of events considering so much of the states electrical power is generated within 35 miles of where those businesses would be located.
In essence Rocky Mountain Power is a public servant that attempts to balance the needs of customers, the direction of the state regulators, the impact of assets on the environment and the needs of its stockholders.
The direction it moves comes largely from customer input, energy policies at both the state and local area, what the public service commission orders and what funding is available to provide service.
According to the company their annual revenue shortfall continues to grow, so the return on equity becomes less and less. This could lead to reduced service or other problems. In the end, reduction in returns could lead to reduced capacity by the company to do what they need to do. There may be no revenues to expand, grow or even maintain the system properly.
A number of pieces of legislation are before the state legislature that would alleviate some of these problems. Those concerns include making sure retail prices reflect the actual cost of doing business, and making sure that companies are compensated for actual costs. Other legislation also deals with issues conderning how the public service commission operates, the timetables they are on for making decisions and the way they conduct business in relation to utility companies.