Utah Power's parent company is planning to use an accounting procedure to track higher wholesale power costs and will use the information in future rate cases.
PacifiCorp has filed with state utility commissions in Utah, Idaho, Oregon and Wyoming for deferred accounting treatment of excess wholesale electricity costs. The trend of high and volatile price levels was pervasive in the West this year is expected to continue through at least next year due to market conditions, the company said.
PacifiCorp has had to augment its own plants' generation with purchases of energy at certain times of the year to meet customer needs. The company has predicted the deferred amount could total $165 million during a 12-month period, depending on the degree of future power price volatility.
"We believe the deferred accounting mechanism is a sensible approach for identifying actual excess costs incurred in this volatile power market, which can then be evaluated as part of future regulatory cases," Matthew Wright, vice president of regulation for PacifiCorp, said in a prepared statement. "These filings have no immediate impact on customers' prices."
PacifiCorp operates as Utah Power and Pacific Power, serving 1.5 million customers in the West.
Utah Power spokesman Dave Eskelsen said Utah's share of the $165 million total is estimated at $67 million.
"Our company this summer was affected like many other companies by higher wholesale power costs, and deferred accounting is a way to track these costs in the future because we expect to see higher-than-normal power costs continue into next year."
Because the company cannot recover such costs retroactively, Eskelsen said, it will track the costs using the deferred accounting for use in its future rate cases.
"When the Public Service Commission sets rates, one of the major factors in making its determination is what the company's costs of providing power are," he said. "The costs that were absorbed this summer were significantly above that reflecting in the rate we charge customers."
Eskelsen said the company has made "prudent" purchases for next year. "I think we're in pretty good shape as far as access to a sufficient power supply, either by trade or contract, so we won't be faced with a shortage next year," he said.
A lack of generation plants being built has led to power shortages in the West. "And there probably won't be additional generation built before summer," he said.
"That's one reason we made these purchases ahead of time — to get the best price possible, although the purchase prices have been higher than is reflected in our current rate structure."