PacifiCorp is hailing a proposal for a new multistate regulatory structure as a way to garner investment for future power generation and transmission facilities.
The structure, in the proposal stage, would allow individual states to shape their own plans for meeting power needs while providing the stability that Wall Street investors would find attractive, company officials said.
It also would allow the company to eliminate a shortfall of $50 million each year that is caused by various states using their own methods to calculate the way the utility recovers its costs.
"That's a huge issue for us, to fill that hole," Doug Larson, PacifiCorp's vice president of regulation, told the Utah Energy Policy Task Force.
The task force is expected to deal with the issue through the rest of the year.
Under the proposal from PacifiCorp, which operates as Utah Power in Utah and Idaho, the company would be realigned to create individual state electric companies, a generation company and a service company.
Each part of the setup would be regulated either at the state or federal level but the net effect would lead to increased investment in power generation plants.
Larson said the various PacifiCorp states have differences in regulatory stances, including the ways that PacifiCorp recovers the costs of new generation and transmission, that make investors hesitant to put money into those projects.
But, the company says, under the new setup, the state electric companies would have long-term contracts for power with the generation company, providing the kind of stability investors find attractive.
Larson said PacifiCorp has considered adding a new generation unit at the Hunter plant in Emery County, but the company is unsure how it will be able to recoup the added cost.
"We've been asked why we're not moving fast on that project," he said. "The answer is a lack of clarity in the type of recovery we will get from the numerous states."
At the crux of the issue is that low-growth states are unwilling to have their residents help pay for the costs of new generation and transmission to serve high-growth states, such as Utah.
"It's a very complex issue and there's no really good clean solution to it because each state has reasons for doing what they do," Larson said. "But there are myriads of options the distribution company would have to meet its load growth."
Legislators had several questions about the proposal. "It seems to me that we would be at other states' mercy and they would be at our mercy," said Rep. Judy Ann Buffmire, D-Salt Lake.
Larson said the new structure would address future load growth and that the power system still would be integrated and regulated.
A new regional regional transmission organization, RTO West, would oversee the transmission. State electric companies would be subject to state jurisdiction. The generation company would be regulated by the Federal Energy Regulatory Commission. The service company would be regulated by the Securities and Exchange Commission.
"It's not that we're going to make a windfall on this. We'll still be regulated under all the pieces," Larson said.
Lowell Alt, director of the Utah Division of Public Utilities, said the division remains unsure about whether the new PacifiCorp structure is the right solution.
Bill Landels, PacifiCorp's top Utah official, said Monday that he expects the approval process to last at least to the beginning of 2002.
"It's a long way to the end," said House Majority Whip David Ure, R-Kamas, "because there are too many scenarios that have to play out."
E-mail: bwallace@desnews.com