SALT LAKE CITY — The state's top consumer advocate had strong criticism for Utah's largest electricity utility following the company's issuance of a pledge to hold rates steady for the next three years.
Rocky Mountain Power Tuesday announced its "pledge to all Utah customers that base rates will not go up at any time before the year 2021." In a statement, the utility said the move was motivated in part to maintain affordable rates for customers who pay nearly 20 percent less than the national average for its electricity.
While the company said the pledge offers customers a period of relative long-term rate stability, the state's consumer watchdog said the situation is not quite that simple.
Even though base power rates will remain the same for the foreseeable future, there are other costs that could very likely increase over that same period, said Michele Beck, director of the state Office of Consumer Services.
"They're parsing their words," Beck said. "It's not as forthright as it could be."
She said there are many rate mechanisms outside of base rates that can and do change, including some proposals the utility has under consideration that will "almost certainly raise some of those other rate components."
Beck mentioned infrastructure and renewable energy projects the company is currently working to develop that could require some fee-based costs that customers would likely have to pay at least some portion of.
"So it does feel disingenuous that they would, at the same time, make a pledge that the base rates will not go up," she said. Among the elements she said could increase during the three-year period are costs associated with new wind power generation and electricity transmission.
She some of the company's plans for new electricity sources would lower rates in the long term, but rates would probably climb first before retreating in the years to come. She added that there are a numerous "complicated moving parts" that have to be taken into consideration regarding the validity of the utility's pledge that make the gesture questionable.
"It is not a meaningful pledge," Beck said.
The company provides electric service to more than 1.8 million customers in Utah, Wyoming and Idaho.
“Rocky Mountain Power’s No. 1 goal is to keep your energy reliable and affordable,” said Cindy Crane, Rocky Mountain Power president and CEO. “In addition to these low prices, Rocky Mountain Power delivers an increasingly cleaner energy mix with new wind and solar farms coming online at historically low prices — significantly cheaper than rooftop solar.”
Rocky Mountain Power spokesman Spencer Hall said the company is trying to contain the costs it can control for the benefit of its customers.
"We're simply saying that we won't be seeking any kind of rate increase until 2021," he said. "This came from the executive team wanting to show the community our commitment that we are the affordable, reliable power producer. We want that to be what we're known for."
However, Beck noted that customers could experience price increases or decreases depending upon the prevailing costs of power generation during the three-year period.
Hall did acknowledge the announcement is also partly in response to critics of the recent net metering settlement.
Net metering allows consumers who generate some or all of their own electricity to use that power anytime rather than only when it is generated. Critics of net metering claim the practice unfairly subsidizes consumer-generated solar and wind power by forcing costs onto non-energy generating customers.
Following a September hearing, the three-member Public Service Commission is currently weighing a proposed agreement on rooftop solar between Rocky Mountain Power and a consortium of diverse groups, including the Utah Solar Energy Association, state Office of Consumer Services and top solar companies.
Under the proposal before the commission, current net metering customers will be grandfathered into the existing system through Dec. 31, 2035, and credits for energy generated from rooftop solar will remain unaltered.3 comments on this story
For now, Rocky Mountain Power said the portion of rates that can be fiscally constrained will stay that way for the next few years. Hall noted that Utah residents currently pay some of lowest electricity prices in the country.
According to the latest available data from the U.S. Energy Information Administration, Utahns pay approximately 8.54 cents per kilowatt-hour compared to the national average of 10.41 cents per kilowatt-hour.
"We try to diversify our entire portfolio. We have renewables along with natural gas and coal, as well as buying from the energy imbalance market," Hall said. "It gives us the ability to forecast our costs and it gives us the ability to make a pledge like this."