SALT LAKE CITY — Utahns will soon pay more to turn on their lights with the announcement Tuesday of a rate increase by Rocky Mountain Power. 

Residents will see the average electricity rates rise 5.64 percent beginning in October and an additional 2.89 percent in the fall of next year.  That translates into an annual bill of $875.08 for the average household in Utah when the rate increases are in place by Sept. 2013.

In the agreement with the Public Service Commission of Utah, the state’s largest electricity utility will receive a $100 million rate increase this year and a $54 million rate hike in 2013. In exchange, the company would not make another rate increase request until at least 2014.

If final approval is given by the commission, the average residential household would see its monthly bill increase by about $4.55 in 2012 and $2.48 next year.

Rocky Mountain Power originally asked for a $172 million rate hike or 10.5 percent, but the director of the Utah Office of Consumer Services — the state’s watchdog agency — said the agreement would save ratepayers millions by avoiding another rate increase request for the next two years.

“We think to get that certainty … is a better deal because the potential for a much higher increase was very real,” Michele Beck, executive director of the Utah Office of Consumer Services, said. The utility had typically made rate increase requests every seven to 18 months that ranged from $50 million to over $200 million, she said.

The agreement includes the provision that precludes the utility from implementing a new rate hike that would go into effect before September 2014.

Rocky Mountain Power called the agreement a “good rate plan for the next two years.”

“We all agree that this is a fair and reasonable result,” said spokesman Dave Eskelsen. “(The agreement) gives some certainty and stability for both customers and the company for the next two years.”

He said the revenue generated by the rate hikes would be used to make infrastructure improvements and meet ongoing operational costs.

Utah ranks among the states with the lowest utility rates in the nation.

A previous Deseret News report indicated that among eight states that make up the Mountain Region, Utah paid the second lowest residential electricity rates at 8.51 cents per kilowatt-hour as of October 2010. Only Idaho had a lower residential rate at 8.02 cents per kilowatt-hour — the lowest in the nation — while Nevada paid the highest regional residential rates at 12.18 cents per kilowatt-hour.

The Mountain Region is comprised of Arizona, Colorado, Idaho, Montana, New Mexico, Nevada, Utah and Wyoming. The region residential average was 10.44 cents compared to the U.S. residential average of 11.93 cents.

“It’s a good outcome for Utah customers,” Beck said. “The settlement contains a lot of provisions that will provide benefit for the next several years.”