Utility could circumvent competitive bid process

Rocky Mountain Power could bypass a competitive bid process under certain conditions when it wants to purchase or build power plants, under proposed legislation.

The electric utility, whose parent company is Portland-based PacifiCorp, is currently required to comply with competitive bidding rules — overseen by an independent evaluator — when new power resources are acquired.

But the current law has prevented the company from purchasing power plants sold at a significant discount.

Mark Moench, senior vice president at Rocky Mountain Power, said the utility had the opportunity last year to purchase a 540-megawatt plant in Las Vegas for tens of millions of dollars less than its market value.

Yet because of Utah's rules, the utility was cut from the first round of bidding. According to Moench, it would have taken the utility six months to get approval from Utah regulators.

Instead of PacifiCorp picking up the natural gas-fired power plant, an investment company out of New York acquired the facility.

Under SB235, the utility would be allowed to sidestep the competitive bidding process if it first obtained a waiver from the Utah Public Service Commission.

Waivers could be allowed in emergency circumstances, a time-limited commercial opportunity that provides value to customers or any other reason deemed to be in the public interest.

Michele Beck, director of the state Committee of Consumer Services, said she has some concerns about the new legislation.

First, the bill appears to be on a fast track to approval, she said. Second, if the utility bypasses the competitive bidding process, it should assume all the risk in ultimately recovering its costs from customers.

Under current rules, the utility is essentially guaranteed to recover the costs of acquiring new power resources.

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