Utah eyes new utility bid process

A controversial $350 million power plant has prompted state regulators to review competitive bidding and affiliate rules of utilities.

On Thursday, Utah Public Service Commission Chairman Ric Campbell said he was unhappy with the tight time frame and allegations of "blackout blackmail" that surfaced during recent hearings on PacifiCorp's self-build Currant Creek power project, a natural gas-fired plant under construction near Mona, Juab County, about 75 miles south of Salt Lake City.

In addition, Campbell said he was uncomfortable that the utility had spent millions of dollars on the project prior to receiving final regulatory approval.

The examination of the bid process will take several months to complete, Campbell said, and could result in new policies or rules.

Several people at Thursday's meeting expressed the need for better disclosure by the utility and consideration of whether a 20-year contract could be fairly compared to a 35-year contract.

Those issues were fiercely debated in February during seven days of formal hearings surrounding Currant Creek.

In March, the three-member Public Service Commission concluded that the Currant Creek project was the best alternative of more than 100 outside bids received by PacifiCorp.

But others continue to maintain the Currant Creek option will end up costing Utah ratepayers tens of millions of dollars in excess costs.

In a meeting earlier this week before the state's Committee of Consumer Services, Scott Gutting, president of Salt Lake-based Energy Strategies, said the Currant Creek plant would cost Utah customers $40 million to $50 million above what they should be paying.

Absent from Thursday's meeting were representatives of Dallas-based Spring Canyon Energy LLC, the only bidder who complained about the bidding process.

Lee Brown, vice president of contracts for Utah-based US Magnesium, said the awarding of Currant Creek follows a similar pattern of "blackout blackmail" that began in 2001. Back then the commission was forced to choose between approving PacifiCorp's proposal to expand the Gadsby plant or having customers face rolling blackouts.

"The ratepayers were subsequently required to pay a premium for the Gadsby plant in 2001," Brown said. "Subsequently, right thereafter, PacifiCorp came in and demanded that the West Valley plant also receive an expedited hearing and that they receive full cost of service for their investments — both Gadsby and West Valley — or they wouldn't build them, but if they weren't built the lights would go out that summer."

John Stewart, director of Utah regulation for PacifiCorp, said the utility welcomes guidance regarding its bidding procedures, including direction on the amount of money the company should spend prior to receiving a final certificate to build a capital project.

By the time the Currant Creek hearings started, PacifiCorp had already spent $10 million on the project. Calling it off would have cost $36 million more, primarily to terminate orders for large-scale equipment. And losses could have reached as much as $126 million had the plans been scrapped by June.

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