Our Legislature is proposing in HB313 (electric utility deregulation) to study the costs and benefits of deregulating electric generation. This morning (Feb. 19), the Public Utilities and Technology Legislative Committee voted on an amendment to HB313. The amendment would freeze electricity rates, at a decreased amount, for the next two years. The vote was 4 to 4 on the amendment and thus did not pass. However, the amendment is sure to come up again.
The amendment is based on Utah Power's "voluntary" offer of a $12.4 million rate decrease.Is this the benevolent gesture of a socially concerned corporation, or is it an end-run attempt by UP&L? Consider this: The Utah Division of Public Utilities (UDPU) filed a rate case with the Utah Public Service Commission (commission) requesting, among other things, a $12.4 million interim rate decrease. If the case is approved by the commission, rates would immediately reflect the interim decrease. This is only an interim amount, an amount to cover the time it takes for all parties to present testimony in the rate case before the commission. In addition to the interim amount, the UDPU's filing indicates that they will argue before the commission for a minimum $38 million rate decrease.
What would a rate freeze accomplish? Obviously, Utah Power would be prevented from raising rates, at least in the next two years, above the interim decreased amount. However, the amendment would also preclude the commission from hearing testimony on further rate decreases for the next two years. In other words, the amendment would effectively deregulate rates without either due process or the threat of competition. Utah ratepayers would receive none of the benefits from deregulation because the freeze would prevent rates being set in a competitive fashion. Utah Power would continue to earn excessive return (at least $38 million worth) on its investment at ratepayer expense.
Benevolent gesture or end-run? You decide, but as for me and my house, we see it for what it is, a clumsily executed end-run attempt late in the first half of an uphill struggle.
Barry H. Bryson
Kaysville