With the ink barely dry on its latest deal to acquire more generating capacity, PacifiCorp appears to be moving in on another troubled utility to try and expand its generating capabilities.
The aggressive moves, though, are making some Utah consumer groups nervous. They fear excess transmission capacities belonging to Utah Power & Light Co., which were made available to other companies under federal order when UP&L merged with PacifiCorp in 1989, will be jeopardized.In October, PacifiCorp purchased ownership of a 350-megawatt plant at Cholla, Ariz., from financially beleaguered Arizona Public Service. PacifiCorp made several hostile attempts to purchase APS entirely before finally settling for the partial buyout. The agreement also allows PacifiCorp to participate in the construction of additional generating capacity using combustion terminals (similar to jet engines) that are used to meet peak loads during high demand periods.
PacifiCorp has asked the Colorado-Ute electric cooperative to extend its bankruptcy filing to mid-January in order to discuss selling or leasing to PacifiCorp some of its excess generating facilities.
"We are interested in some of Colorado-Ute's assets, but we want a deal that will be mutually beneficial to both groups," said UP&L spokesman John Serfustini. Serfustini noted that Colorado-Ute is in financial jeopardy because it has no market for its excess power. "If PacifiCorp can market that power, then it is beneficial for both groups."
Guido Rachiele, a member of the Utah Committee of Consumer Services, said he fears PacifiCorp is attempting to eventually use Utah's extensive transmission system to feed power into Southern California markets.
"It appears they are after monopolistic control," Rachiele said.
Dan Gimble, a committee analyst, agreed. "Most experts expect the surplus bubble (of electricity) to burst in three to four years, and they see California as a black hole to be fed."
Rachiele said efforts are needed to protect Utah ratepayers from subsidizing PacifiCorp activities that do not directly benefit Utah customers. He said Utah appears to be a key link in PacifiCorp's expansion effort.
Utah Public Service Commission Chairman Ted Stewart said the PacifiCorp activity is being closely watched. He said the commission is trying to ensure that Utah ratepayers do not subsidize activities that do not directly benefit the state.
PacifiCorp will have to show that these acquisitions directly involve Utah ratepayers, or the related expenses will not be included in evidence presented during rate cases, Stewart said. Unless there is a direct link and a direct benefit, Stewart added, PacifiCorp will have to go elsewhere (customers in other states) to recover its expenses.
Regulators from the seven states served by PacifiCorp's two electric utilities, Pacific Power & Light Co. and UP&L, are meeting in San Diego this week to further refine an allocation method that will divide the company's assets among the states for the purpose of rate setting.
Utah became the first to adopt the so-called "consensus method" formally. The method will be used in the second phase of UP&L's current rate case. Stewart said refinements will be needed as PacifiCorp continues to expand.