Rocky Mountain Power said Friday it plans to appeal to the Utah Supreme Court a denial by the Public Service Commission for rate hikes aimed at Utah consumers, as well as the accompanying downgrade of its credit rating.
“Rocky Mountain Power intends to exercise our right to pursue the full appeal process in an effort to preserve the health of the utility and protect customers from adverse consequences following the Utah Public Service Commission’s order, which included a credit rating downgrade. Credit rating downgrades increase costs for customers and severely hinder the company’s ability to make needed energy investments in Utah, a key driver of statewide economic growth," the utility company said.
Rocky Mountain Power had initially requested a rate hike of 30%, scaled it back to 18% and was ultimately granted an increase of just under 5%.
The Public Service Commission, which regulates utilities, was scathing in its remarks regarding its denial issued earlier this month.
“At the outset, the PSC wishes to address the hyperbolic, intemperate, and occasionally disrespectful tone of RMP’s Request. RMP flings baseless, sweeping accusations that the PSC “cite(s) no evidence at all” for “many” of its “conclusions” and “ignore(s) evidence ... when it would lead to a different result,” the document reads.
“Worse, RMP impugns the integrity of the PSC, insinuating the Order “as a whole, appears (to be) outcome motivated” for the purpose of denying RMP prudently incurred costs “under the guise” of controlling costs. This offensive characterization is untrue, unhelpful in what has been a careful deliberative process, and the PSC is disappointed that RMP would stoop to what can be construed as an attack on the impartiality and integrity of the PSC."
While the commission said it recognized that Rocky Mountain Power would disagree with some of its findings, it emphasized that the conclusion was based on a “sincere effort to get things right.”
The dispute and impacts to Utah ratepayers
The Public Service Commission said there is nothing applicable to Utah electricity rates as it concerns the other five states served by PacifiCorp and its desire to recoup costs in those areas.
“... Utah customers are not RMP’s guarantor of last resort for skyrocketing and imprudent costs that RMP incurs to protect its shareholders from policies and events arising in other states,” the commission said.
It pointed to costly settlements PacifiCorp had in the aftermath of wildfires in other states and costs incurred in other states which would be unfair to impose on Utah ratepayers.
In Oregon, PacifiCorp was hit with wildfire-related jury verdict payments of $200 million and settlement payouts of over $1 billion. The commission noted that the commissions in Oregon, Wyoming, and Idaho have also declined RMP’s request that their ratepayers subsidize Washington’s customers.
It noted that unless an appellate court directs the commission to act, it will not impose those costs on Utah ratepayers.
The dynamics behind a six-state service area
Rocky Mountain Power also wanted Utah ratepayers to bear all the costs associated with Chehalis’ generation from a gas-powered power plant in Washington, but the commission noted those costs are a matter strictly confined to the utility company and its shareholders.
Additionally, the utility company sought to recover from Utah ratepayers costs associated with construction and operation of a fish hatchery in Oregon. The commission said Rocky Mountain Power undertook the project to fulfill an obligation under the Klamath Hydroelectric Settlement Agreement.
“Because of planned dam removals, the hatchery RMP previously relied on to fulfill this obligation lost its water supply,” the commission said.
It also rejected costs built into a Utah Wildland Fire Protection Plan, proposed by the utility company on the heels of legislation passed earlier this year into law.
Credit standing takes a hit
The Moody’s downgrade noted the utility company retains a stable outlook given its diversity built into its service area, which dominates the northwestern United States.
“PacifiCorp’s credit profile has been under pressure, driven by rising costs and debt associated with wildfire litigation and mitigation efforts that the rate case outcome will not sufficiently alleviate, a key reason for the downgrade,” said Toby Shea, vice president and senior credit officer for Moody’s.
The credit rating company cited:
- The Utah Public Service Commission issued a rate order in late April that approved an $87.2 million increase to PacifiCorp’s Utah base rate, representing only 26.4% of the company’s request for a $330.2 million increase. The commission also premised its revenue requirement calculation on an authorized return on equity (ROE) of 9.375% and an equity ratio of 44.43% — both well below industry averages.
- The commission disallowed, among other things, $106 million of wildfire mitigation capital expenditures, $63 million in excess liability insurance premiums after reconsideration, and $13 million related to the state of Washington’s carbon emission allowance requirements. The commission may have viewed that some of these costs are related to developments in other states within PacifiCorp’s service territory, such as the 2020 Labor Day wildfires in Oregon and policy-driven costs stemming from the state of Washington. It concluded that Utah ratepayers should not bear the financial burden of cost escalations originating in other states.
- In addition, PacifiCorp continues to face mounting wildfire-related litigation expenses and liabilities. As of the first quarter of 2025, the company has accrued $2.75 billion in estimated probable losses and has paid $1.33 billion in settlements. To bolster its balance sheet and liquidity, PacifiCorp has suspended annual dividends and reduced capital expenditures, enabling it to retain more cash to help absorb the financial impact of wildfire liabilities. Nevertheless, the strain on its credit remains significant.