Rocky Mountain Power customers are likely to see a second rate hike this year
One of the main utility companies in the state is proposing to increase their rates again. This comes after Wyoming customers saw rate hikes just a few months ago. WyoFile’s energy reporter Dustin Bleizeffer has followed the issue and spoke with Wyoming Public Radio’s Caitlin Tan.
Editor’s note: This interview has been lightly edited for clarity.
Caitlin Tan: So we're talking about Rocky Mountain Power. They serve about 150,000 electric customers in Wyoming, and they're proposing to increase rates as soon as July. Dustin, tell us what you found in your reporting.
Dustin Bleizeffer: Rocky Mountain Power is part of the larger utility PacifiCorp, which operates in six western states, including Wyoming. So the company said that it experienced higher wholesale power purchases and higher costs for natural gas in 2022, as a result of extreme weather events throughout its six-state operating region, which kind of extends to the Pacific Northwest. And so those extreme events included heat and drought in the summer, and unusually cold weather in the early winter months.
During extreme weather conditions, more people either turn up their air conditioners or turn up their heat and that results in a spike in demand for fuel, which in turn can drive up the price for those fuel sources. So PacifiCorp has requested a rate increase of about $50 million for its Wyoming customers. Presumably, it's asking for similar rate adjustments in other states for the fuel costs that it didn't anticipate.
What that means for the customers in Wyoming – if the rate adjustment is approved, as proposed – is a 7.6 percent rate increase, or about an extra $3.52 per month for the average household customer.
CT: It sounds like when we're talking about extreme weather events, these rate increases are actually kind of normal. Do you think they were at all larger this go around?
DB: This adjustment is somewhat larger than their estimate from last year. So utilities are continually adjusting their rates based on actual costs, which gets very complicated, but basically, utilities estimate what their future costs will be to set their rates for the coming year. And that's done with a lot of scrutiny from the public service commission if you're a regulated utility, like Rocky Mountain Power.
Generally speaking, electric rates in Wyoming have held fairly steady. The average Wyoming customer pays about 11 cents per kilowatt hour, compared to the national average of 15.3 cents per kilowatt hour. Overall, Wyoming customers fare pretty well when you compare them to the rest of the nation.
CT: Now, if we look back a few months ago, there was actually already a rate hike this year for Rocky Mountain Power. Didn't the prices go up in February for a carbon capture compliance fee? And Dustin, can you explain what this is and why it happened?
DB: What happened earlier this year is Rocky Mountain Power took on some additional expenses that were mandated by the Wyoming Legislature. Wyoming has mandated that utilities with coal fired power plants in the state are not allowed to retire those facilities earlier than scheduled unless they first explored the possibility of retrofitting them with carbon capture technologies, and complying with that mandate costs money.
Both Rocky Mountain Power and Black Hills Energy have had to spend money to conduct their own studies and call for bids among prospective contractors. So those costs from the Wyoming [legislature] mandate, those are passed on to Wyoming customers and only Wyoming customers, because it's a Wyoming law.
So the state had to accommodate for that and allow Rocky Mountain Power and Black Hills to charge a carbon capture compliance mandate, which looks like an extra $2 million for Rocky Mountain Power customers. Wyoming ratepayers will pay that whether or not a utility actually moves forward with a carbon capture retrofit.
CT: That's interesting. And isn't the additional fee 0.3 percent?
DB: For Rocky Mountain Power it’s 0.3 percent.
CT: So going back to the rate hike we were talking about at the beginning and it being related to extreme weather – how do you think that's going to play into things going forward with climate change and more extreme weather expected in the years to come?
DB: Extreme weather disrupts commodity markets like natural gas, and natural gas is used to generate electricity, as well as being used as a raw product in the home. And so if there's a hurricane in the Gulf that affects natural gas prices it can affect your oil prices. As we know, if there's an extreme arctic blast of cold, everybody's turning up their heater at the same time. So, these extreme weather events are just very disruptive. They're disruptive to these commodity markets, and those are the basis for the cost of delivering electricity.
CT: What are you hearing in your reporting from Wyoming ratepayers, and do ratepayers really have a say in any of this?
DB: Ratepayers don't like surprises, they don't want to pay more than they have to. The cost of living for all of us feels like it continues to creep upward. Customers are also very suspicious of big companies increasing their prices.
So when it comes to a utility, like Rocky Mountain Power, it's a regulated utility, because it has a monopoly. For example, I live in Casper, and so I don't really have a choice. Rocky Mountain Power is my electricity provider. And so as a monopolistic utility, that comes under the authority of the Wyoming Public Service Commission, which scrutinizes what that utility charges its ratepayers. It brings them in and says, ‘Okay, show us the real numbers, what are your actual costs?’ In that there is opportunity for customers to participate in hearings and submitting comments. But it's a very complicated process. It's an entirely foreign language and it's super complicated. And it's not easy.
CT: Well, that's WyoFile’s Dustin Bleizeffer speaking with us about rate increases with Rocky Mountain Power. You can find more of his reporting here.