RMP Proposed Utah Rate Increase: A Controversial Move Amid Rising Costs and Infrastructure Investments

Utah residents are bracing for significant changes in their electricity bills as Rocky Mountain Power has recently proposed a significant general rate increase, citing the rising costs of fuel and wholesale power, alongside necessary investments in new electric transmission and generation projects. This proposal which is currently under review by the Public Service Commission, stirred controversy and sparked debate among consumers, lawmakers, and energy experts.

The Rate Increase Details

According to a press release from Rocky Mountain Power, the proposed increase would result in an average overall customer increase of 2.31 cents per kilowatt hour, with an average residential increase of 3.34 cents per kilowatt hour. For Utah residents, this translates to a substantial 30.6% increase in their energy bills.

To mitigate the impact on customers, Rocky Mountain Power proposes a phased approach through a two-step rate change. This method is intended to ease the financial burden on customers over time.

Step One: Effective February 2, 2025, the cost per kilowatt hour will rise by 1.93 cents, moving from the current rate of 10.96 cents to 12.89 cents. For residential customers, this step will result in an average monthly increase of $13.87.

Step Two: Effective January 1, 2026, the cost per kilowatt hour will further increase by 1.42 cents, bringing the new rate to 14.21 cents per kilowatt hour. This step will add an average of $10.27 to residential monthly bills.

In total, the price increase for residential customers will be 3.35 cents per kilowatt hour over the two-year period.

Immediate Reactions

The announcement was met with swift condemnation from Utah Governor Spencer Cox, who promised to ensure the rate hike "never sees the light of day."

Rocky Mountain Power, however, defends the increase. Dick Garlish, the company president, has explained to local media that like many businesses facing inflationary pressures and increased costs outside their control, the utility must seek a rate increase to continue operating effectively.

Key Investments Driving the Increase

Significant capital investments included in the rate increase request are the Gateway South transmission project and renewable energy projects like the Rock Creek wind project in Wyoming. Despite opposition and litigation from some groups, these projects are essential to the company’s strategy to maintain and expand energy infrastructure.

The Impact of Natural Gas Prices

Natural gas prices play a significant role in the rate hike. The Henry Hub reports that the wholesale price of natural gas in the United States in 2022 was the highest since 2008. As coal-fired power plants transition to natural gas or new plants are built that avoid coal, natural gas remains a cleaner but more volatile market option for baseload power. Dave Eskelsen, a spokesman for Rocky Mountain Power, noted that resetting “net power costs” is a primary factor behind the increase since the last rate hike in 2020.

Future Outlook and Challenges

If both phases are implemented, residential customers will pay 14.21 cents per kilowatt hour. Historically, Utah’s electricity rates have been among the lowest in the nation, but it's uncertain how these proposed increases will impact that standing moving forward.

Legislative Responses and Clean Energy Investments

Rocky Mountain Power's proposal has also highlighted tensions within the state legislature regarding energy policy. The state legislature’s recent passage of SB224 discourages new investments in clean energy generation in favor of maintaining traditional fossil fuels. This decision could hamper the utility’s ability to invest in wind and solar projects that could mitigate volatile fuel prices in the long term. Delaying these investments could result in higher costs for consumers in the future.

Conclusion: Time to Demand Change

The proposed rate increase by Rocky Mountain Power has sparked significant debate among stakeholders, highlighting the complex interplay between rising operational costs, necessary infrastructure investments, and the push toward cleaner energy sources. As the Public Service Commission reviews the proposal, the outcome will have far-reaching implications for Utah’s energy landscape and its residents. Lastly, the proposed rate increase underscores the company's dedication to maintaining and improving the energy infrastructure essential for Utah's growth, while also striving to minimize the financial impact on its customers.

Make your voice heard!

The Utah Public Service Commission will always accept customer comments on issues facing our community members. Since the rate hike is driven by high fuel costs, we recommend you comment by reminding the PSC and RMP that their best way to protect customers from future rate increases is to accelerate the shift to renewable energy - both in utility-scale solar and wind and in distributed-scale rooftop solar. Send your email here.