PacifiCorp, the parent company of Rocky Mountain Power, is proposing to sell its Washington service area to Gem, an affiliate of Portland General Electric Company, for approximately $1.9 billion. However, the deal, which requires approval from public service commissions in multiple states including Utah, faces skepticism from state watchdogs and advocates who question if it truly benefits Utah's public interest. The Utah Office of Consumer Services and the Utah Division of Public Utilities have raised concerns about the long-term impacts on ratepayers and the sufficiency of the company's analysis.
Dick Garlish, president of Rocky Mountain Power, testified to the Utah Public Service Commission in April that operating PacifiCorp across six states with varying policies has presented its “share of difficulties.” Garlish noted that other states, excluding California, have refused to cover costs associated with Washington's Climate Commitment Act, forcing PacifiCorp to absorb approximately $45 million annually for its natural gas Chehalis power plant. This, he stated, is “unsustainable, and exacerbates the financial challenges PacifiCorp now faces,” stemming predominantly from wildfire liability and “adverse regulatory outcomes.” Garlish asserted the sale would not harm Utah ratepayers, expecting a $68.9 million rate credit for customers over three years, alongside benefits like improved system balance and financial position, and relief from Washington's climate laws.
Initially, some Utah political figures expressed enthusiasm for the sale. Utah House Speaker Mike Schultz, R-Hooper, reacted positively in February, stating, “We want a divorce from the three states that don’t look like Utah.” Schultz suggested the sale would be a “great benefit to the citizens of the state, helping keep lower prices here in the state of Utah.”
Despite PacifiCorp's assertions, the Utah Office of Consumer Services (OCS) contends that Rocky Mountain Power's application is flawed and lacks sufficient proof that the sale is in the public interest. Leah Wellborn, a consultant for the OCS, testified in August that the company's analysis presents only a “short-term view” of the sale's long-term impact, leading to an “overestimation of the benefits to Utah.” An OCS economic analysis indicates “net harm in the post-transition period to Utah,” with Wellborn highlighting that the Washington buyer is acquiring resources below market value. The OCS recommends several conditions for approval, including additional rate credits of $106 million, which would bring the total to $175 million, plus commitments to reduce expenses and ongoing monitoring to ensure shareholders bear excess costs, not customers. Of the $1.9 billion sale, $504.7 million is a gain, and while PacifiCorp proposes retaining 32% and sharing 68% (with $68.9 million for Utah), advocates argue Utah's share should be significantly higher.
The Utah Division of Public Utilities (DPU) has not reached a definitive conclusion, but their August testimony pointed out deficiencies in the company's paperwork, including missing updated depreciation schedules, decommissioning costs, estimates for remaining life of reallocated power generation, and “meaningful net present value or risk studies.” While Matt Pernichele, a Utility Technical Consultant for the DPU, noted potential benefits like decreased net power costs and additional generation for Utah, he also highlighted significant risks. Pernichele detailed that PacifiCorp operates many aging coal and natural gas power plants, some dating back to 1955. A 2018 depreciation study recommended these plants be closed by 2042, but PacifiCorp “seems to have few plans to replace these plants.” Pernichele warned that replacing approximately 5.5 gigawatts of dispatchable generation within a decade would be “expensive and likely require PacifiCorp to greatly increase its already large debt load,” potentially increasing market prices in Utah, Idaho, and Wyoming. He also cautioned that operating aging thermal plants becomes more expensive and that regulatory changes could impose additional costs or force premature shutdowns. Under the current proposal, Utah ratepayers would assume an “additional 8.1 percent of these risks along with an increased allocation,” Pernichele stated. The DPU also recommends a thorough economic analysis of wind farms, which are currently producing less energy than anticipated, making their power more expensive.
PacifiCorp has not yet filed official replies to these comments. Simon Gutierrez, a spokesperson for the company, stated in an email on Friday that PacifiCorp “welcome[s] the opportunity to demonstrate the clear public benefit of this transaction through the Commission’s review process.”