PacifiCorp is preparing to sell its Washington service area to Gem, an affiliate of Portland General Electric Company, a move that state watchdogs and advocates are scrutinizing for its impact on Utah ratepayers. The proposed $1.9 billion sale requires approval from public service commissions in all six states where PacifiCorp operates, including Utah.
Dick Garlish, president of Rocky Mountain Power, testified to the Utah Public Service Commission in April about the inherent difficulties of operating PacifiCorp across six states with differing policies. He noted that several PacifiCorp states, excluding California, decline to cover costs tied to Washington’s Climate Commitment Act, including expenses for making its natural gas Chehalis power plant compliant. Garlish stated that PacifiCorp has been compelled to absorb approximately $45 million annually in costs from the Chehalis plant, describing this as unsustainable and exacerbating the company’s recent financial pressures, which include declining credit ratings due to wildfire liability issues and "adverse regulatory outcomes."
Upon news of the sale in February, Utah House Speaker Mike Schultz, R-Hooper, expressed enthusiasm, characterizing the sale as an initial step forward in line with Utah lawmakers' efforts to explore splitting the company. He anticipated that the sale would greatly benefit Utah citizens by helping to maintain lower prices.
However, the Utah Office of Consumer Services argues that Rocky Mountain Power’s application is flawed and fails to demonstrate that the sale serves the public interest. While Garlish asserted the transfer would not harm Utah ratepayers and would be positive, providing a $68.9 million rate credit to Utah customers over three years and other benefits, the Office of Consumer Services holds a different view.
Leah Wellborn, a consultant representing Utah’s Office of Consumer Services, testified in August that PacifiCorp’s analysis offers only a short-term perspective, leading to an overestimation of benefits for Utah. An independent economic analysis by her office instead indicated "net harm in the post-transition period to Utah," suggesting the Washington buyer is acquiring resources at below market value. Of the $1.9 billion sale price, $504.7 million is the gain on the sale. PacifiCorp proposes retaining 32% of this gain and sharing the remaining 68% with customers, which would result in $68.9 million for Utah.
Due to these economic concerns, the Office of Consumer Services recommends additional rate credits of $106 million, which would bring the total to $175 million for Utah ratepayers. They also seek commitments from the utility to reduce expenses and ensure ongoing monitoring during the transition, aiming to place the risk of excess costs on shareholders rather than customers.
Simon Gutierrez, a PacifiCorp spokesperson, stated that the company "welcome[s] the opportunity to demonstrate the clear public benefit of this transaction through the Commission’s review process."
The Utah Division of Public Utilities has not yet reached a definitive conclusion. However, it noted in its testimony that PacifiCorp’s submitted paperwork lacks updated depreciation schedules, decommissioning costs, estimates for the remaining life of reallocated power generation, and comprehensive net present value or risk studies.
Matt Pernichele, a Utility Technical Consultant for the Utah Division of Public Utilities, testified in August that the sale could offer benefits to Utah ratepayers, such as decreased net power costs for the entire company and the allocation of additional generation to Utah, potentially fostering economic growth. Yet, Pernichele also highlighted significant risks for Utah. He pointed to PacifiCorp’s many aging coal and natural gas power plants, some operational since 1955. While a 2018 study suggested all coal plants be replaced by 2042, Pernichele observed that the company appears to have limited plans for replacement.
He warned that if 5.5 GW of dispatchable generation needs replacement within approximately a decade, it would be expensive and likely increase PacifiCorp’s substantial debt. Such retirements without replacements could also lead to increased market prices in the Utah, Idaho, and Wyoming service area. Pernichele added that operating and maintaining older thermal plants becomes more costly over time, and potential regulatory changes could impose new costs, operational restrictions, or force premature shutdowns. Under PacifiCorp's proposal, Utah ratepayers would assume an increased allocation of these risks, amounting to an additional 8.1 percent.
Furthermore, Pernichele noted that PacifiCorp's wind farms are collectively producing less energy than expected while maintaining constant costs, making their power more expensive. The agency recommends a thorough economic analysis of these facilities and a new depreciation and decommissioning study prior to any final reallocation of the company’s assets.
