Utah has become the first of seven states affected by the merger of Utah Power & Light Co. and PacifiCorp to formally adopt a "consensus method" for allocating the merged companies' assets for use in rate hearings.
The method, which has been worked out by representatives of regulatory bodies from the affected states over the past 18 months, will undergo further scrutiny this week in San Diego. Attorneys and analysts from the Utah Public Service Commission, Division of Public Utilities and the Committee of Consumer Services will meet with their counterparts from the other states for a weeklong review session.UP&L is involved with its first major rate hearing since the merger. This will be the first time any of the affected states have based a rate case on the merged operations of the company. The second phase of that hearing will begin next month. The hearing is expected to end in a rate reduction since PacifiCorp promised a minimum 2 percent rate reduction yearly for the first three years of the merged operation. Commissioners have pledged to hold the company to that promise.
By adopting the consensus method, the commission effectively eliminated the company's energy balancing account, which has been used in the past to cover the company's costs for fuel (such as coal) to generate power. That account has been reviewed twice yearly for adjustments without formal hearings to determine if a rate increase or decrease was needed to meet company expenses. Usually, cost savings in the form of lower fuel expenses resulted in a pass through rate decrease. Sudden jumps in fuel costs generated pass-through rate increases.
The commission order released Friday also provides regulating agencies with direction for future interjurisdictional allocation methods and adopts the Division of Public Utilities' proposed treatment for customers governed by Federal Energy Regulatory Commission regulations.