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Utah Power rate request creates furor
by Bob Mickelson
Dec 08, 2004 | 154 views | 0 0 comments | 0 0 recommendations | email to a friend | print
BOUNTIFUL -- Utah Power's request for a $111 million rate hike has been challenged by the Committee of Consumer Services, which contends the utility should actually be required to reduce rates, not increase them.

The committee, a state utility organization representing residential and small business customers, recommended Utah Power's rates be cut by $39 million (3.4 percent), a position it has taken before the Utah Public Service Commission.

The Utah Power request represents a 9.6 percent increase that will cost the average residential customer an additional $4.75 a month. The increase would take effect in April.

For its part, Utah Power says the rate increase is justified to continue necessary investment into its power infrastructure, to cover employee expenses and other increases in the cost of doing business.

"This represents a common divergence of opinion that often occurs in rate increase requests among groups that analyze these requests," said Utah Power spokesperson Dave Eskelsen Tuesday. "But there are lots of ways to analyze the company's financial situation."

Not surprisingly, Eskelsen feels the $111 million rate increase is both "justifiable and defensible and we intend to present that to the Public Service Commission (PSC)."

To Eskelsen, the current situation is simply "part of the process." Many times a series of settlement hearings are held during which some issues may be resolved. If some remain outstanding, they are taken before the PSC.

Utah Power's position is that the utility has been under- earning in Utah and, based on increased demand, it's appropriate that more income come from those creating that demand.

"To the extent the committee feels we should do this with less money, we're curious to know," said Eskelsen.

Utah Power has been trying to meet demand through building new sub-stations and expanding existing ones. New generating facilities are also required and Utah's share of those facilities, as part of the six-state area Utah Power serves, has been increasing.

"The proportion our customers should support these rates has grown," Eskelsen continued. "And it's not just a question of providing service to more customers, but increased use by individual customers."

Along with increasing demand for service, Eskelsen contended the cost of doing business has also gone up. Employee expenses, like salaries, pensions and healthcare are costing more.

"We feel we have a very strong case on this issue," he added.

None of this is all that unusual. Back in 2001, a $168 million rate increase was brought before the PSC. The process of hearings and appearances before the commission reduced the amount approved to $65 million.

This time around, however, the two sides are roughly $150 million apart.

Dan Gimble, energy group manager for the Committee of Consumer Services, said his group has analyzed Utah Power's request and believes it to be excessive. It has challenged the utility's cost projections, not just the amounts shown, but how they were arrived at.

"We've looked at pension costs, plant additions, tax issues and the overhead of Scottish Power, parent company of PacifiCorp and its subsidiaries, like Utah Power," he stated. "The committee's direct testimony shows that many of PacifiCorp's revenue, expense and capital projections are either unreasonable or unsupported.

"Based on that," he added, "they (Utah Power) should get a 3.4 percent rate decrease."

With Utah Power's request, submitted back in August, and now the Committee of Con-sumer Services' response, a dialogue between the two sides has been created. According to Gimble, Utah Power will move next to present any "rebuttal information."

"It's possible they have some information that might cause us to reconsider our analysis," he said. "That should take place Jan. 14 before the PSC."

The settlement hearings are due to commence Feb. 14. Though no date has been set for it yet, sometime during that week, a "public witness day" will also be held.
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