A Utah legislative audit found the current administration in charge of the Office of Energy Development inherited a mess in the making since its inception 12 years ago, including a revolving door of five different executive directors and seven varying mission statements that changed the office’s area of emphasis.

The review by the Office of the Legislative Auditor General concluded that in part has led to a lack of strategic planning, risk analysis and modeling for future trends that are more critical than ever given a transitioning future of Utah’s energy with an eye toward reliability and being affordable.

“Utah is at an energy crossroads and needs better planning to meet future energy needs,” said a key takeaway in a summary of the audit.

“International trends and pressures from the federal government and other states are driving an energy transition that impacts the state’s ‘any of the above’ energy policy,” it said, adding the office needs a proactive plan and to provide stronger energy direction to the state.

In a response by Joel Ferry, the executive director of the Utah Department of Natural Resources, and Greg Todd, director of the Office of Energy Development, the two acknowledged the uncertainty created by staffing changes and other policy challenges.

“We recognize there have been inconsistencies and uncertainty due to the transitory nature of OED’s directors and structure, but the current administration is committed to establishing standards of operations to formalize processes that will create long-term stability,” wrote Ferry and Todd.

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The Legislature has provided the Office of Energy Development and other entities with resources to strengthen the state’s ability to plan and develop energy sources, the audit said, noting that the energy development office can lead Utah to develop resources that align with priorities while still balancing economic and environmental impacts.

Since its inception in 2011, however, the office has undergone seismic shifts internally that have compromised both its continuity and direction, the audit said.

Specifically, it noted the office:

  • Has had five different executive directors and during one summer, no one occupied that position.
  • Has had seven versions of a mission statement. As an example, it embraced a focus on energy and minerals in 2020, shifted to enhancing energy infrastructure in 2021 and in 2023 had returned to focusing on energy and minerals.
  • Lacks an adequate number of employees with energy specific expertise, and in addition, lost a significant amount of institutional knowledge with a 100% turnover rate experienced since 2021. Only one employee has been working at the office for more than two years.

“OED’s frequent changes to its mission also indicates shifts in stability and direction throughout the history of the office,” the audit said.

Energy reliability, planning and Utah’s future

Beyond turnover, changes in leadership and a collage of varying mission statements, the Office of Energy Development faces challenges preparing for the future given its lack of current planning, the audit said.

“From our observation, OED does not utilize any form of modeling for predicting the impacts of energy sources on economic development and energy prices. However, other states have demonstrated the advantages of modeling for understanding and mitigating future risks.”

It stressed that the National Association of State Energy Officials recognizes several states that have led the way in energy modeling and data analytics, including Virginia, which models decarbonization. New Jersey utilizes modeling in its master plan to define upcoming energy services as a result of a growing economy, a calculation of its energy needs and making investment decisions that combine least-cost scenarios while meeting policy targets.

The audit said Utah’s reliability in energy ranking dropped 15 positions in one year, according to a 2022 report by the Citizens Utility Board, which produces one of the only comparative analyses of state utilities.

While its electricity remained affordable — at No. 1 in both 2021 and 2022 — its reliability decreased compared with other states due to increased outages and disruptions, even though the state has not experienced any widespread power failures like other states. The audit noted the lack of planning among many entities in Utah to prepare for such a widespread event.

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Utah’s long-term reliability was also clocked at an elevated status for energy shortfalls due to retirements of coal and natural gas generation and the lack of available hydropower, according to the North American Energy Reliability Corporation, a nonprofit organization.

Beyond reliability, the audit pointed to the risk Utah incurs because of its heavy dependence on natural gas and its volatile pricing that has trended upward for the past five years.

According to the U.S. Energy Information Administration (EIA), 9 out of 10 households in Utah use natural gas for their primary heating fuel, which is a higher proportion than that of any other state.

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Both Ferry and Todd stressed their dedication to making improvements.

“We are committed to proactively implementing data-driven policies and recommendations to move the state forward by maximizing the state’s diverse energy and mineral resources,” they said in their written response.

Among the office’s multiple steps underway are hiring an emerging technologies expert to help develop a structure for data-driven policy recommendations and development of a report that incorporates modeling of both federal and regional trends, risks and policy recommendations specific to Utah.

The office also plans an audit of Utah’s current energy needs and to identify current generation being used to meet existing and future demand.

In conclusion, the audit noted how crucial the Office of Energy Development is to provide energy direction to Utah.

“Although the Office of Energy Development has had periods of instability, the office is positioned to improve the state’s energy strategic direction and goals,” it said. “It is critical for the office to strengthen this function and lead the state through this crucial time in energy development. By providing expertise and guidance, the office can fulfill its role in ensuring the state has reliable and affordable energy resources for generations to come.”