CASPER — More than a month after requesting a rate hike of 13.7 percent for 2010, Rocky Mountain Power officials say several factors are in play that could lessen the increase for Wyoming ratepayers.

“We expect to see a considerable decrease in power costs for the period covered in our 2010 application,” said Rocky Mountain Power spokesman Jeff Hymas.

Rocky Mountain Power — Wyoming’s largest utility — filed its 2010 rate case in October asking to raise rates overall by 13.7 percent, or about $71 million, to cover growing electrical demand in the state.

The utility anticipates an overall growth rate of about 3.9 percent among its Wyoming customers, while total energy demand across the company’s six-state service region is expected to drop 1.6 percent.

In the proposed rate case, electricity sales to large industrial customers are forecast to increase by 4.8 percent from 2008 levels. Residential sales are expected to increase by 1.6 percent and commercial sales to increase by 1.2 percent.

Upgrades to support that growing demand in Wyoming cost money, and that’s the driver behind the overall rate increase request, Hymas said.

But the utility now says it could shave $8.9 million off the rate increase — trimming the increase to about 11.9 percent — if the Wyoming Public Service Commission allows a change in tax treatment and the method of accounting for coal stripping costs.

In addition, Hymas said, the rate increase will likely be trimmed through its “power cost adjustment mechanism” next year. The mechanism allows the utility to make a midyear rate adjustment based on the actual power costs that can sometimes fluctuate, such as natural gas and coal purchases on the open market.

“The net effect should be significantly lower (rate increase) than the $70.9 million as proposed in the rate case,” he said.

Aside from the need for new facilities, Hymas said power costs are still a driver behind the general rate increase. Contracts for coal supply and for moving power on transmission owned by other entities are expiring. In the current energy environment, Rocky Mountain Power expects that the next round of contracts will be higher.

 

Intervention

 

So far the Wyoming Public Service Commission has granted intervenor status to eight entities. That means their comments and evidence will be considered as the commission looks at Rocky Mountain Power’s request.

The intervenors are:

• State Sen. Cale Case, R-Lander.

• Richard Garrett, Lander.

• Wyoming Office of Consumer Advocate.

• AARP Wyoming.

• Wyoming Industrial Energy Consumers.

• Cimarex Energy Co.

• Kinder Morgan Interstate Gas.

• Questar Gas Management Co.

Denise Wendinger, property manager for Pine Tree Condominiums in Casper, said her company is watching the rate case closely. She said if the 13.7 percent increase is granted, the company may to look at savings elsewhere to avoid raising monthly condo dues.

“A rate increase won’t affect just residential customers, but businesses also struggling in the economy,” Wendinger said. “We’d like to know if Rocky Mountain Power has been watching their budget as closely.”

The Wyoming Office of Consumer Advocate was granted intervenor status in the rate case. Senior counsel Ivan Williams said it’s too early in the process to have identified any objections to the company’s application.

“The review is in the early stages. We’re getting responses to our discovery back,” Williams said.

One focus of the Office of Consumer Advocate will be to scrutinize the validity of Rocky Mountain Power’s requested “return on equity.” In its 2010 rate case, the utility has requested a return on equity of 11 percent, Williams said. Its most recent approved rate of return on equity in Wyoming was 10.25 percent.

Williams said his office has not yet calculated what it thinks to be an appropriate return on equity.

“I will say we’ve never said, ‘That’s great,’ or ‘It should be higher,’ ” Williams said.

In an e-mail to the Star-Tribune, Case said he intervened “because I am convinced that the future pattern of electricity rate increases will have more impact on the pocketbooks of my constituents than almost any other factor in the next few years.”

Except for one segment of transmission in Idaho, Rocky Mountain Power’s 2010 rate case does not include costs related to the proposed $6 billion Gateway high-voltage transmission projects aimed to carry some 6,000 megawatts of new electrical generation from Wyoming to Western urban markets.

It also does not include potential increases from proposals to put a cap on greenhouse gas emissions.

Contact Dustin Bleizeffer at dustin.bleizeffer@trib.com or 307-577-6069.