Settlement to raise power bills by $6

Rocky Mountain Power customers will see their electricity bills rise nearly $6 a month through a settlement announced Wednesday.

The Salt Lake City-based utility, formerly known as Utah Power, said it reached a consensus with the state's Committee of Consumer Services and the Utah Division of Public Utilities to raise rates $115 million, which will be implemented in two phases: $85 million, effective Dec. 11, 2006; and an additional $30 million on June 1, 2007. That equates to a $5.76 monthly increase for the typical residential customer.

The deal must still receive approval of the Utah Public Service Commission.

The utility in March requested a $197 million increase, the largest amount ever requested in the utility's history, which would have raised rates $10 a month for a residential customer using 753 kilowatt-hours

Typically, a rate request results in hearings before the Utah Public Service Commission. However, private negotiations between the utility and state regulators resulted in the current settlement.

Reed Warnick, interim director of the consumer committee, said the $115 million increase is a "desirable" settlement.

Warnick said the committee's calculations indicated there was little chance of whittling down the $115 million had the issue gone to litigation before the PSC.

Warnick noted that the committee worked to secure a settlement that results in no change in electric rates until August 2008 and requires the utility to withdraw its application for a power cost adjustment mechanism that would have allowed the utility to pass through to customers, on a dollar-for-dollar basis, its purchased power and fuel costs. The settlement also reduces the utility's authorized return on equity, or allowed profit, from 10.5 percent to 10.25 percent.

"We prefer no rate increases at all," Warnick said. "What made this filing somewhat unique is that a lot of the money that is requested is going to increasing generating capacity and we've been on the utility to improve the reliability of their system."

The bulk of the $115 million rate increase will go to pay for two gas-fired power plants:

• The $350 million Currant Creek power plant, located west of Mona, Juab County, about 75 miles south of Salt Lake City.

• The $330 million Lake Side power plant, currently under construction on 62 acres at the site of the defunct Geneva Steel in Vineyard.