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Rate hike too low, PacifiCorp says

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PacifiCorp is not committing to it yet, but the company is at least hinting that it will ask the Utah Public Service Commission to reconsider its decision to allow the utility a $40.5 million rate increase.

The company wants more — something closer to the $118 million request debated during a week of hearings this summer. Bill Landels, the company's top Utah executive, said Tuesday that the commission's decision Monday was "disappointing."

"We will look at all options, including rehearing and appeal," Landels said. "There's no doubt about that."

PacifiCorp spokesman Dave Eskelsen said the utility has 30 days in which to petition for a rehearing. The commission would have 30 days in which to answer or decline to answer. The next avenue of appeal would be the Utah Supreme Court.

Most of the requested increase had been attributed to the high cost of power the utility bought on the wholesale market during peak periods to meet customer demand.

"The decision at $40.5 million really falls short of actual power costs the company has been incurring and continues to incur. We have a shortfall there," Landels said.

Landels said the decision was surprising in that municipal power systems — whose prices are controlled by city councils instead of the PSC — and Questar Gas Co. have received large increases recently, as has PacifiCorp in Oregon.

Questar recently received approval on a pair of pass-through increases totaling $230 million. PacifiCorp on Friday was granted a $64.4 million revenue increase by Oregon regulators.

"Our increase is low. It's difficult for us to see what the difference is. We've all suffered through price volatility," Landels said.

PacifiCorp's original request in Utah was for $142.2 million.

If the $40.5 million increase stands, Utahns will find out how much their bills will change after a commission hearing on customer-class impacts the first week of October. Because the commission granted an interim increase of $70 million in February, customers will receive a refund. The amount and timing of the refund will be established by the commission.

Landels described the commission's interpretation of rules applied in the rate case as "strict and narrow."

"I had hoped we could look at the big picture — about what shareholders are having to swallow and company earnings and market positions."

He hopes Utah regulators and the company can have a better dialogue to determine "what works for the state of Utah," Landels said.

"What worries me and frankly our board is that the response from this commission raises questions in the board's mind about investment on a scale we're contemplating in new plant and how these investments might be viewed in the future," Landels said.

"The energy resource needs going forward — peaking and base load plant — are required to meet growth in Utah, and I've got a board asking questions. They don't have comfort on cost recovery. I'm not threatening anything, but we'll ask questions. We've got to have a dialog."

PacifiCorp also has filed for a $103.5 million increase in Utah for costs of replacement power during an unexpected power plant unit shutdown, and officials have said the utility will turn to regulators to meet the costs of purchased wholesale power that has turned out to be at prices far above current market rates.

E-mail: bwallace@desnews.com