Power company requests 11.3 percent rate increase, effective across Utah next August

By Sun Advocate

Rocky Mountain Power has proposed an overall price increase of 11.3 percent to become effective in August 2008.
According to Rocky Mountain Power, the proposed increase stems from climbing costs to the company during a two-year period.
If approved, the company’s request would translate to an increase of approximately $4.50 per month on average for a typical residential customer using 767 kilowatt-hours.
The major factors driving the request are the large investments needed to provide electric service to customers and the rising cost of generating and purchasing electricity, indicated Rocky Mountain Power.
Projections indicate that capital investments will approach $2.8 billion, or 40 percent above that reflected in current prices.
As well, costs of generating and purchasing electricity top $1 billion – up 34 percent from costs reflected in current prices. The total amount of the company’s Utah request is $161 million.
“Rocky Mountain Power connects some 22,000 new customers every year,” said Richard Walje, company president. “An increase in prices is essential to maintain and expand our systems for existing customers, provide for new customers and secure new generation and transmission resources for the future,” he said.
“We recognize price increases affect all our customers because we see how those same types of price increases affect our business,” added Walje. “The most difficult decision for any business is the decision to raise prices. This is especially true for so vital a commodity as electricity. We do not take the request for price increases lightly.
“Still, our electricity prices remain a significant value when compared to other goods and services. Even with this increase, our prices will be among the lowest nationwide,” Walje noted. The Edison Electric Institute’s June 2007 national survey of average electric prices shows that even with these proposed price increases, Rocky Mountain Power will remain among the lowest-cost electric service providers in the United States,” continued the company president.
Rocky Mountain Power prices in Utah declined through much of the 1990s and have increased much more slowly than most other goods and services, indicated Walje. As a result, the company’s proposed overall average electric price in this filing, without adjusting for inflation, will equal the company’s overall average price paid for electricity in the mid-1980s.
“The proposed level of return is more in line with the company’s present business risks related to our large capital investment program, which is required to properly serve our customers,” said Walje. “As well, there is significant uncertainty about how carbon dioxide emissions might be regulated in the future. The company has been earning well below its allowed return in recent years. Without better returns, the company cannot attract the lower-cost financing needed to provide for the capital investment Utah customers need. Lower costs of financing in a vigorous construction phase mean lower prices for customers over the long term.”
An analysis and audit of the company’s financial results and forecasts will be completed before public hearings are scheduled before the Utah Public Service Commission. The process may extend into August 2008, with a final determination by the commission before new prices are implemented, noted Walje.