In the heat of a fiery August debate about Rocky Mountain Power’s proposal to increase their rates next year, Utah lawmakers asked the state’s largest electricity provider to consider another option: split with its parent company, PacifiCorp.
Legislators gave RMP President Dick Garlish until November to draft a high-level proposal explaining how such a “divorce,” as Rep. Joel Briscoe later called it, might happen. Garlish came back Wednesday morning with the report, and an early conclusion: a separation like what lawmakers are asking for, he said, would be complicated and political.
“Restructuring might be an answer, but it has its challenges,” Garlish said. “I want to emphasize: it’s not that Rocky Mountain Power is just Utah and Wyoming. All [six] states own part of the partnership and its assets. They all have a say.”
It wasn’t what Utah lawmakers wanted to hear.
“You can tell the frustration of this committee and the frustration of your customers,” Rep. Carl Albrecht, R-Bicknell, said after heated exchanges between Garlish and other lawmakers on the Natural Resources Agriculture and Environment Interim Committee. “There’s a lot of frustration out there. You’re going to present this again today in public utilities [interim committee]. God be with your soul.”
The cause for higher rates
PacifiCorp, which is owned by billionaire investor Warren Buffet’s Berkshire Hathaway, provides utilities in six states, including Utah but also including Oregon, Washington and California. It is the westernmost states, whose politicians favor clean energy over coal and natural gas, that most concern Utah lawmakers.
“I’ll go on the record and say: California [lawmakers] do not make good regulatory decisions on their natural resources,” committee chair Walt Brooks, R-St. George, said.
Rep. Casey Snider, R-Paradise, asked Garlish, “Are we paying more because we’re subsidizing poor regulatory decisions in other states?”
PacifiCorp and Rocky Mountain face a $30 billion settlement from a devastating wildfire in Oregon for which PacifiCorp was found liable. A court ruled that the company did not shut down power lines in extreme fire danger.
The rate increase does not account for the settlement agreement, Garlish told lawmakers in August. But it does cover higher insurance premiums incurred as a result.
Utah Clean Energy, a nonprofit advocacy group, has argued that Utah’s own dependence on fossil fuels is driving the rate increase. Logan Mitchell, climate scientist and energy analyst, said in August that the revised request “is still tied to rising fossil fuel costs” in addition to rising insurance premiums, and “underlines the need to add more zero fuel cost energy like wind, solar and geothermal to protect customers from rising and volatile fuel prices.”
Coal prices have risen as mines close, and the price of natural gas has nearly doubled since 2021. Rocky Mountain Power had made a promise early this year to transition away from coal and toward cleaner energy, but later scrapped that plan.
Lawmakers passed two bills earlier this year to keep the state’s two biggest coal plants alive and allow RMP to pass the associated costs onto Utah customers.
“Negotiate the divorce papers”
Garlish’s proposal Wednesday detailed factors that Utah and RMP would have to consider in the separation: workforce impacts; costs associated with buying out existing contracts and mortgages; and regulatory approvals. Two Democrats on the Public Utilities Interim Committee, including Briscoe, questioned whether the cost of the separation would outweigh any possible benefits.
“When we went to negotiate the divorce papers,” Briscoe asked, would Utah have to pay alimony, and wouldn’t those costs fall on Utah customers?
“Like any breakup, it’s not cost-free,” Briscoe said. “New entities will have to be financed, in a way that’s sustainable. Current agreements and obligations would have to be negotiated. Are the costs worth it?”
“If we’re focused on reliability and cost, is there any reasonable expectation that any of those things would move in the right direction by shrinking the system size?” Sen. Nate Blouin, D-Salt Lake City, asked. “It seems like there’s no world in which we reduce costs and increase reliability if that’s the direction we move in.”
The separation “begs a bigger discussion” that would have to include all six states in which PacifiCorp operates, Garlish said. It’s a discussion he’s willing to facilitate, but told lawmakers it will take time — probably close to two years.
During the morning committee meeting, Albrecht suggested Garlish has the power to influence the terms of the split, saying, “You’re the boss.”
“I am the leader of Rocky Mountain Power,” Garlish answered. “But I have a boss. I’m here to deliver a report and facilitate conversations. I want to do what’s best for the company, for Utah and for the other states I’m responsible for.”
Both committee presentations ended with the request that Rocky Mountain Power narrow in on a proposal to separate from PacifiCorp. What, specifically, would need to happen to move forward, Brooks asked, and what complications might Utah “need to eliminate” to get there?
Garlish agreed to “take the message up the mountain” and come back with another report. Lawmakers did not give him a deadline this time.
Rocky Mountain Power is scheduled to present at the Public Services Commission in December to defend the proposed rate increase.
Shannon Sollitt is a Report for America corps member covering business accountability and sustainability for The Salt Lake Tribune. Your donation to match our RFA grant helps keep her writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.
