March 1, 2024
SALT LAKE CITY – Western Resource Advocates (WRA) and Utah Clean Energy today expressed deep disappointment with Energy Independence Amendments (SB 224), a bill to ensure Utah’s largest electric utility will remain heavily reliant on expensive and highly polluting coal power – a move that undermines years of progress and will saddle captive ratepayers with higher utility bills. Significantly, the language in this bill dangerously weakens regulatory cost protections normally required for monopoly utilities.
In March 2023, PacifiCorp forecasted it would retire its Hunter and Huntington coal plants by 2032 because those facilities would no longer be cost-effective.SB 224, which currently awaits Gov. Spencer Cox’s signature to become law, aims to prevent these Utah coal plants from closing, even if continued operation of these facilities will cost customers more money than cleaner alternatives like solar and wind resources.
Some states served by PacifiCorp, such as Oregon and Washington, are shedding their coal power because of its high costs and high pollution rates. SB 224 ignores these costs and risks and requires the Utah Division of Public Utilities to negotiate the acquisition of additional coal capacity that other states don’t want.
In effect, SB 224 completely rewrites the rules of utility regulation – rules intended to keep electricity rates charged by monopoly utilities “just and reasonable.” Traditionally, a utility is required to provide evidence that its rates are fair for customers. But under this new legislation, PacifiCorp will no longer have the obligation to justify why certain costs associated with its coal plants are reasonable. Removing this traditional safeguard against high prices will harm customers.
In addition to weakening regulatory oversight over rates, this bill removes PacifiCorp’s incentives against mismanagement. If the utility does not need to justify its costs, it has less incentive to manage them. Shareholders, not customers, should bear the risk of utility mismanagement.
This is bad energy policy that shatters years of progress toward a clean and reliable energy grid and ties Utahns to a very risky fuel source. Utah has gone all in on coal in a way that fundamentally misunderstands how the grid works, dismantles important ratepayer protection, and ignores the very real threats to energy reliability and affordability posed by continued reliance on coal.
The Utah Legislature took a backward step with SB 224. Rather than charting a forward-looking path and embracing opportunities to lead in a new energy era, this bill commits Utahns to take on the cost and risk of these aging, costly resources. Tilting our energy policy this dramatically to keep uneconomical coal resources running, and doing it at the expense of ratepayers, contradicts Utah’s “all-above” energy strategy. Worse, Utahns will miss out on incredible opportunities to bring online new, reliable clean energy resources.
The new bill also creates a potentially billion-dollar Utah wildfire fund from a surcharge on customer electric bills to pay for PacifiCorp’s liability for wildfires in Utah. The bill does not shield Utah ratepayers from being forced to pay for costs of wildfires in other states that PacifiCorp serves, such as Oregon; nor does this bill replace any of the current wildfire insurance-related costs being collected from ratepayers. In other words, the bill creates only new financial burdens for Utah ratepayers, without reducing the underlying risk.
“Calling this measure ‘Energy Independence’ is a cruel irony. This is not how you create an affordable, reliable, and clean grid.,” added Hayes. “You do that with competitive energy supplies, smart planning, and sharing resources across states to ensure lower rates and cleaner electricity for everyone. It’s disappointing to watch our legislature put the profits of PacifiCorp over the health and financial wellbeing of Utahns.”
Media Contact:
James Quirk, 908-902-3177, james.quirk@westernresources.org
