Federal price caps on electricity sales across the West have either been "a non-event" or resulted in "a significant impact" to Utahns, speakers told the state Energy Policy Task Force on Thursday.
The caps, instituted by the Federal Energy Regulatory Commission in June, spread wholesale electricity price limits across the West as a way of calming the volatile energy markets during peak demand periods by capping the price to the cost of production at the least-efficient electricity generating plant in the region.
Don Furman, senior vice president of regulation, government affairs and communications for PacifiCorp, said wholesale prices were climbing at the end of last year, and PacifiCorp faced those higher market prices as it replaced power lost during a monthslong, unplanned shutdown at a Hunter power plant unit.
Wholesale prices were several hundred dollars per megawatt-hour, but by the time the caps were implemented, the prices already were falling. They now stand at about $30 per megawatt-hour, nearly the same level as before the energy crisis hit last year.
"The order came late," he said of FERC's price-cap action. "If you do it, you should have done it in January and saved us all a lot of pain. . . . In a lot of ways, it's been sort of a non-event."
More power generation coming on-line, falling prices for natural gas used for power generation and conservation efforts have helped bring prices down. "We've done it without shivering in the dark or sweating in the heat," Furman said.
The company is philosophically opposed to price caps but realized in January that short-term measures could help in a wholesale electricity market that was not working as it should, he said.
He expects a functioning market to be in place by winter, at which time he expects the caps to be removed.
But agencies that represent large blocks of municipalities in the power field said the price caps have hurt them.
Ted Rampton, government affairs manager for the Utah Associated Municipal Power Systems, said the caps were put in place after UAMPS purchased electricity for future use. The price UAMPS paid is now three to four times the wholesale market price, essentially punishing organizations that had undertaken wise power-purchasing activities.
He said UAMPS hopes to address its problems with FERC.
"This has had a significant impact on us in terms of dollars, and we're trying to mitigate those now," Rampton said without stating amounts.
Mike Peterson, executive director of the Utah Rural Electric Association, which represents rural electric cooperatives, said co-ops have suffered relatively small effects from the price caps. The co-ops have been selling their excess generation, and the caps have cut into their profits, he said.
But the co-ops are now evaluating their plans to expand generation at the Bonanza Power Plant. Recently the plant was generating only 365 megawatts of its 460-megawatt capacity because buyers had other generation options, he said.
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