The process of determining just how much power customers will save - or pay - as a result of the merger between Utah Power & Light and Pacific Power and Light will begin next week in San Diego.
Representatives from seven states and the Federal Energy Regulatory Commission will meet informally in an attempt to hammer out an agreement on how cost and revenue allocations stemming from the January merger should be allocated.That informal agreement should play an important roll in determining customer rate structures in the affected states.
Douglas Kirk, executive director of the Utah Public Service Commission's technical staff, said the meeting's main objective will be establishing the criteria to be used by the various state public service commissions as they formalize the orders that allowed the merger.
Like Utah, most state commissions approved the merger with the stipulation that it result in "net" positive impacts.
The merger approval orders were based on hypothetical benefits expected from the merger. Kirk said the San Diego meeting will give officials their first look at the real operation that has resulted from the merger.
"Nothing from these meetings will be binding on the commissions," Kirk said. "It is hoped that many of the technical elements can be resolved and we can agree on objectives and criteria to be used by the commissions."
The San Diego meeting will run for three days. Kirk believes at least one, and possibly two more meetings will be needed to arrive at an informal agreement.
The fundamental issue is the actual allocation of costs and revenues. While the companies are merged, Kirk believes efforts will be made to separate the resources of the divisions in determining the allocations.
Kirk says there appears to be little support for a straight cost-averaging application. More likely is a format that will provide some level of benefit to customers in each state without creating large swings up or down in local rates.
Just how the individual states will formalize the agreement will vary. The Utah PSC will probably use a rate case this fall involving UP&L to handle its allocation order. The PSC could order a separate hearing but that is not considered likely. The merger approval requires UP&L to file rate information with the commission this fall.
Kirk said the division concept is a new step in the process and will require some time to work through.
In addition to Kirk, Utah will send representatives from the Division of Public Utilities and the Committee for Consumer Services.
The division reviews all utility rate requests and allocations proposal and makes recommendations to the PSC. It is also responsible for representing large utility customers during PSC hearings.
The committee represents small business, residential and agricultural utility customers. The committee also reviews petitions and makes presentations before the PSC.