Provo City utility customers may see their power bills decrease during the next few years now that the Federal Energy Regulatory Commission has ruled that Utah Power and Light Co. has overcharged the city for various services.
According to Mayor Joe Jenkins, UP&L will be obligated to pay back an amount that will be substantially over $500,000 and could be as high as $2 million."Residents will see a difference in the long run," he said."
Jenkins said the Utah power company has charged the city's energy department too much for transporting or "wheeling" energy on its lines since 1985.
"They were charging us 27 mills and it should have been 17 mills," he said.
Dave Mead, manager of public relations for UP&L, said, "The Commission told us to pay Provo back an amount that was collected in excess because of some low frequency and dispatching services. We had collected that charge without it being filed with the FERC (Federal Energy Regulatory Commission). We were instructed not to keep it and return it."
Jenkins said the judge also ruled in the city's favor that UP&L charged double for maintenance and operation costs at the company's Hunter plant in Emery County.
In addition, the FERC ruled that UP&L wrongfully put Provo City in a different rachet demand for wheeling, Jenkins said. The rachet demand is the percentage of lines dedicated to transport a certain amount of power for the Utah Municipal Power Agency, of which Provo City is a member. When more power is used, the rachet is higher since more dedicated lines are needed.
Mead said UP&L's way of determining the monthly rachet billing differed from the way the FERC believed it should be calculated, so the Utah company will comply with the FERC's opinion.
The ruling from FERC came July 29 after the agency heard the case and ruled in the city's behalf.
The definite amount that UP&L must repay the city is still unknown, but Jenkins said the city should know the amount within the next two or three months.
Jenkins said he suspects the city will get a lump sum payment from UP&L, which will go into the city's reserve fund. Provo City electricity rates were raised 9.8 percent this year to help ease a cash flow crunch in the city's Energy Department. The mayor said the department has had no reserve funds to help expand the system since 1979.
The Energy Department faced a $1.2 million operating deficit next year if revenue was not increased. The department has been burdened with an increase in the number of power customers and at the same time a reduction in the amount of relatively inexpensive power available to the city.
Before any money is refunded and put into the reserve fund, both UP&L and Provo City will make their recommendations to FERC as to how much is owed. UP&L also has 30 days to go back to FERC with any questions about the ruling.
"We had believed we were collecting the right amount," Mead said. "But the FERC has asked that we comply and we will with new provisions."