Utility bid rules may change

Can a regulated utility simultaneously be a fierce competitor and impartial judge in an open bidding process?

According to companies who lost to PacifiCorp in the bidding to build a 525-megawatt, natural gas-fired plant near Mona, Juab County, the answer is no.

And that has prompted proposed legislation governing competitive bidding procedures for electric generation in the state.

The fallout comes after PacifiCorp in November chose itself to build a nearly $350 million power plant, called the Currant Creek project, from among 79 individual bids. The power plant must still receive regulatory approval from the Utah Public Service Commission.

Sen. Curt Bramble, R-Provo, said the controversy over Currant Creek has raised questions about whether the bid process was truly competitive.

"Right now all the utility has to do is consider other proposals, and once they've considered them, then they can make whatever selection they want," Bramble said. "It doesn't require them to choose the lowest cost provider."

Bramble's bill, SB198, would change all of that, granting rulemaking authority to the Public Service Commission in establishing new parameters for competitive bidding on electric generation.

Chief among the new rules would be an independent evaluator chosen by the commission to oversee competitive bidding against a utility self-build option. Under the Currant Creek scenario, the outside evaluator was chosen by PacifiCorp.

The bill also provides for an incentive mechanism, allowing the utility a rate of return on power purchase contracts. Under current rules, utilities only make a return based on their capital investment.

Dave Eskelsen, a spokesman for PacifiCorp — which operates as Utah Power in Utah — said the company opposes the bill.

"It is a fundamental change in utility regulation in Utah and likely not a good one," Eskelsen said. "The bill would seem to limit the flexibility of the Public Service Commission in its ability to choose between a cost-based generating resource built by Utah Power in favor of power purchase agreements. It would effectively force Utah Power out of the power plant building business."

But Bramble said that, under the current system, a utility has no incentive to select an outside bidder.