Rocky Mountain Power Makes Case For Rate Hike, Says Large Users Will Pay More

CHEYENNE — Rocky Mountain Power is already seeing a lot of interest in what it called “very large customers,” company officials said during public testimony Tuesday as the power company fielded public input on its latest double-digit rate increase proposal.

That’s why it is proposing new requirements for very large ratepayers who reserve 50 megawatts (MW) or more, so the costs such users ring up won’t be forced upon regular residential or small business ratepayers. Ratepayers who require 200 MW or more, meanwhile, will have to enter into a special contract with Rocky Mountain Power.

Rocky Mountain Power’s initial ask in the latest rate case is for an overall 14.7% increase to cover various costs, totaling $123.5 million for Wyoming. 

That’s expected to add $17 to an average residential ratepayers’ bill per month, according to figures from Rocky Mountain Power.

The company has said it needs the money to cover capital investments for transmission, including renewable resources, increased operations and maintenance expenses, and increasing insurance costs due to wildfire risk. 

The company has reached an agreement with the Wyoming Office of Consumer Advocates and Wyoming Industrial Energy Customers to take some of the edge off this latest increase. That agreement drops the overall rate increase to 10.2%, an overall cost increase of $85.5 million for Wyoming, with an approved return on equity of up to 9.65%.

That would in turn drop the hike for an average residential ratepayer’s monthly bill to $14, according to Rocky Mountain Power.

Either way, the rates have to be approved by the Wyoming Public Service Commission, which has allocated three days of public testimony to the utility company’s latest rate case.

Settlement agreement

A large portion of the settlement agreement takes a deep dive into the problem of handling large ratepayers, which are defined as those with reserved capacity of 50 MW or more.

Rocky Mountain Power’s Senior Customer Regulatory Specialist Anna Demers described it as a proactive step on the company’s part.

“In Wyoming, we’ve seen a lot of interest from very large customers, but we’re really kind of getting ahead of the problem here,” she said. “By making terms clear to customers, (as far as) what their cost of service really is and how that will be born going forward.”

According to the terms of the agreement Rocky Mountain Power has struck with Wyoming Office of Consumer Advocate (OCA) and Wyoming Industrial Energy Consumers (WIEC), which together represent about 70% of the state’s ratepayers, very large new load customers will have to take some steps showing they have sufficient credit or collateral to cover their minimum on-peak power charges for at least five years.

They will also be subject to both minimum and excess demand charges, designed to keep companies from over- or under- estimating how much power they really need.

“If they’ve underestimated what they need, that could potentially cause problems,” Demers said. “So they’ll now be charged an amount to hopefully deter them from underestimating their needs.”

Line extensions are to be paid in advance of construction. And, unless otherwise specified in a special contract, very large load customers must share proportionately in any network upgrade costs, unless the network upgrade is identified as a critical facility in Rocky Mountain Power’s long-term transmission plans.

Demers said 50 MW was chosen as the threshold because that was the level settled on by public service commissions in Utah and Oregon. 

“This seemed like a very reasonable place to settle,” Demers said. “At some point, every line extension is different, and you just sort of have to draw the line.”

Demers said the company’s adding these provisions ahead of the incoming wave, to ensure there is time to sort through and try to fix any problems with the system.

“It’s good to get ahead of the problem, and to communicate Clearly and have provisions in a tariff that can be applied consistently to large customers as they come in,” she said. “I think the company is trying to be transparent and explain why it’s there for very large customers, and why it makes sense for the entire system going forward … to ensure we’re not overbilling and we’re managing our capacity well.”

Data Centers Could Challenge Current Rate System

The strain that future very large customers could put on Wyoming is something that AARP Wyoming’s Sam Shumway has been watching closely. 

“We need to be really thoughtful in how we approach things,” he told Cowboy State Daily. “We have some real challenges on the horizon with data centers, with AI and the processing.”

Shumway wants to ensure that the costs for ramping up to serve large demand customers doesn’t get laid on the constituency he represents, many of which are already struggling to deal with rising costs of necessities like food and eggs, on top of back-to-back increases for utility rates.

“Some of these data centers use as much power as like all of northeastern Wyoming,” he said. “I don’t feel like that can just be put on the backs of consumers.”

Likewise, Holland and Hart attorney Thor Nelson, who is WIEC’s general counsel, told Cowboy State Daily said that this is an issue his organization is also watching closely, on behalf of Wyoming’s largest energy customers.

“Currently, there’s a lot of data center development going on in the Black Hills area here in Cheyenne,” he said. “But there’s not so much proposed … in the Rocky Mountain Power area yet. Most of the issues are happening in Utah.”

Still, he added, it is good to lay a foundation to deal with the issues ahead of time.

“It’s not clear how big an issue it’s going to be in the rest of Wyoming outside of Cheyenne,” he said. “But obviously it could happen, and it’s certainly happening elsewhere, so we’ll have to be attentive to that.”

Telecommunications are one limit to data centers locating in large chunks of Wyoming, Nelson said, but he believes both Casper and Laramie would both be potentially attractive areas for large users like that.

Both Casper and Laramie have some proximity to I-80, which has become a nexus for data centers across the nation. 

“That’s largely because of the telecommunications backbone that’s available in that area, and not available elsewhere,” Nelson said. “I don’t expect we will see a lot of this in Sheridan, but I could be wrong. We’ll see.”

Nelson expressed support for the settlement agreement between Rocky Mountain Power, Wyoming OCA and WIEC, saying he felt it struck a fair balance between competing needs.

“While no rate case is ever welcomed, we do think that rate increases can be justified to make sure the utility has a reasonable opportunity to recover the cost it incurs to serve customers,” he said. ‘And while we do care about affordable rates, we also certainly do care about making sure there is reliable electricity. You have to strike a balance there.”

Renée Jean can be reached at renee@cowboystatedaily.com.