SALT LAKE CITY — Utah Gov. Gary Herbert signed a massive bill involving Rocky Mountain Power on Wednesday, signaling his intent to allow a five-year pilot project to prove its merits or unravel in failure.
Modified four times and the subject of wonky debates on regulatory purview and where it belongs, SB115 revamps much of how the utility company does business.
The Sustainable Transportation and Energy Plan Act passed this last legislative session and establishes mandatory utility investments in electric vehicle infrastructure, clean coal research and development, and sets up more equitable pricing via renewable energy tariffs for large customers.
Critics said components of the complicated measure will ultimately hurt ratepayers with increases on utility bills and allow the company too much discretion by removing some oversight by the Public Service Commission.
"The biggest problem with that bill is Rocky Mountain Power was writing its own policy," said consumer watchdog Claire Geddes.
The act, however, does not allow the utility company to raise rates — that remains an action that must be approved by the commission — and gives the commission the discretionary authority to allow the utility to invest up to $3.4 million a year in battery storage, solar or economic development incentives.
The bill takes the final $10 million of the utility's five-year Utah Solar Incentive Program, already funded by ratepayers, and puts that money for the next five years into the new pilot program.
Jeff Larsen, vice president of regulation for Rocky Mountain Power, said a number of issues are impacting the company that drove the need for the reforms, including compliance with federal pollution mandates, such as regional haze, and an increasing preference — both from households and corporations — to use renewable energy for a power source.
The Sustainable Transportation and Energy Plan Act does not affect net metering customers — those with rooftop solar energy systems that get credited by Rocky Mountain Power on their utility bill for the amount of power they produce. A proposed net metering fee remains in a case that is winding its way through the scrutiny of the Public Service Commission, as both sides make arguments about what costs and benefits of solar should be considered.
The trend toward residential solar, however, is impacting the company and putting pressure on rates, Larsen said.
Net metering customers are doubling each year, he added, and the solar incentive program approved five years ago by the Public Service Commission was designed to provide financial encouragement for investment in systems using new and pricy technology.
"The market is maturing and we are now at a time when we are providing incentives to our customers who are doing it regardless," Larsen said.
The fact that a percent of what is charged to ratepayers for solar will stay on utility bills to fund other programs drew criticism from consumer advocates who argued rates should reflect only the cost of energy and providing service — nothing else.
Critics, too, don't like the change to the utility company's energy balancing account, shifting it to a new recovery ratio that allows it to collect 100 percent of its variable power costs from customers — compared to the 70-30 split that had been in place since the 1990s.
The 100 percent share is in effect on a pilot basis for 3 ½ years and is subject to reauthorization by the Legislature, as well as periodic reports by the commission.
Larsen said the recovery of 100 percent of their costs from customers is still subject to review by the commission and is a ratio that is in place for Questar in Utah, as well as 42 other states.
Geddes said the shift is problematic because it puts risks on customers but provides a potential windfall to the utility company.
The bill also allows the utility company to set up a rainy day fund to offset its costs and impacts to ratepayers related to the potential retirement of two coal-fired power plants in Utah.