Utah lawmakers passed a law in 2024 that, among other things, allows utilities to establish a fund to cover their liability in case of extraordinary expenses associated with utility-caused wildfires.
The bill was likely in response to a PacifiCorp settlement with 400 plaintiffs following deadly wildfires that destroyed several Oregon communities around Labor Day in 2020.
SB224, sponsored by Sen. Scott Sandall, R-Tremonton, also allows the cost of such reserves to be funded by a surcharge on the utility’s customers.
Now Rocky Mountain Power has filed for a proposed rate hike of 4.48 percent — for potentially as long as the next decade — to establish the self-insurance fund rather than purchase commercial insurance, the rates for which have skyrocketed since the PacifiCorp settlement.
During hearings before Utah Public Service Commission (PSC) in November, Rocky Mountain Power executives said the 4.48 percent increase would mean about $3.70 a month hike in the bill of an average residential customer — the cap established by SB224.
With the rate hike, Rocky Mountain Power said it would collect about $109 million per year and about $1 billion over the next 10 years. For reference, since the Labor Day fires, PacifiCorp has settled nearly 4,200 wildfire claims for $1.6 billion.
In its filing with the PSC, Rocky Mountain Power said its rate increase proposal is in the public interest, especially now that “the increasing incidence and severity of wildland fire has put unprecedented financial pressure on electric utilities operating in Western states like Utah.”
“The availability of the Fire Fund supports customers and the state of Utah generally by fostering the financial stability of the company so it can deploy capital to effectively serve customers,” the company wrote in its request. “Massive claims on utility assets arising from wildfire liability could compromise the company’s ability to expand infrastructure to meet current customer needs and expected load growth in Utah.”
Sandall’s legislation requires that the fire fund supplement other forms of insurance and not be maintained within Rocky Mountain Power’s fiscal operating system. Instead, it must be a restricted account and only be used if there’s a catastrophic fire with liabilities that insurance won’t pay for.
Liability for losses in the PacifiCorp Labor Day fires case was based on court testimony that the utility failed to avoid fires by not keeping power lines clear of brush and debris and by not cutting power from the lines when high winds were expected.
Rocky Mountain Power’s request was not unexpected following the passage of SB224, but its timing was bad, coming just a year after a controversial request by Rocky Mountain Power for a more than 30 percent residential hike. That request was ultimately reduced to a 4.7 percent increase by the Public Service Commission.
Rocky Mountain Power spokesperson Dave Eskelsen reiterated that the fund can be used only in case of catastrophic wildfires.
“This is for a specific account,” he said. “It is specifically for Utah, and it will be transparent for what we charge for.”