UTAH ASSOCIATION OF ENERGY USERS
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2023
ACCOMPLISHMENTS
The Utah Association of Energy Users was actively involved in several key issues in 2023, including Rocky Mountain Power’s (RMP) All-Source Request for Proposals (RFP) and RMP’s filing for a Deferred Accounting Order for costs related to the Oregon wildfires. UAE also remained actively involved in RMP’s Multi-State Process (MSP), Integrated Resource Planning (IRP) process, and Demand-Side Management (DSM) activities, the Energy Balancing Account (EBA) and REC Balancing Account (REC) filings, and other dockets. Regarding natural gas, UAE analyzed Dominion Energy Utah’s (DEU) pass through, infrastructure tracker, daily imbalance charges, and other filings. On the national environmental front, UAE monitored several energy-related rules, including the ozone and regional haze (Good Neighbor Rule), methane-emission reporting, greenhouse gas (GHG) emissions, and others, as well as continued interest in carbon capture and nuclear energy. Regionally, UAE continued to participate in the California Independent System Operator (CAISO) energy imbalance market and the expected extended day-ahead market (EDAM). UAE also actively participated in legislative matters that arose in the 2023 Utah General Session, supporting or helping refine the language on 19 bills that impacted energy issues. Additional details on the major activities and accomplishments of the UAE Intervention Group and the UAE Legislative Group in 2023 are provided below.
ELECTRICITY
RMP 2022 All-Source RFP
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The Commission approved PacifiCorp’s 2022 All-Source RFP process in April 2022. The RFP sought bids for 1,345 MW of new wind and solar resources, 600 MW of co-located battery storage and 274 MW of Demand Response, all to come into service by the end of 2027. UAE actively participated in that docket by filing comments with suggestions designed to ensure that the RFP will yield a robust market response and that all bids will be evaluated fairly.
Most of UAE’s suggestions were adopted by PacifiCorp and others were adopted by the Commission in its order approving the solicitation process. The solicitation process approved by the Commission required benchmark bids to be submitted by November 2022 and market bids to be submitted by February 2023.
PacifiCorp and the Independent Evaluators examined the bids, and a final shortlist was expected to be determined by June 2023. However, the Company on several occasions delayed the deadline to determine the final shortlist for projects that have commercial operations due in December 2027.
After several delays UAE expected the shortlist to be issued in mid-October, however, on September 29, PacifiCorp announced it was suspending its 2022 all-source RFPs to adjust its procurement plans, citing changing operational and regulatory environments, including proposed or pending federal regulations and the uncertain wildfire risk and uncertainty. The commercial operation date for the projects is still December 2027.
UAE had anticipated that RMP would file an application in 2024 seeking approval of the resources selected in the 2022 RFP. Now, it is uncertain when the Company will decide on re-activating the RFPs in 2024. UAE has actively participated in the process to develop the RFP and will actively participate in any approval process.
RMP Deferred Accounting Order
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At the beginning of September 2020, a historic wind event resulted in several wildfires spread across Oregon causing widespread and extensive damage in and around the Company’s service territory. The fires resulted in a court case filed by several Oregon customers and a class-action suit.
On June 12, 2023 a Multnomah County jury awarded $90 million in damages to a subset of just 17 victims of four fires from Labor Day 2020, with potentially thousands of other victims in the class to be compensated in future court proceedings.
The financial damages could balloon to tens of billions of dollars. Just nine days later, PacifiCorp (RMP parent company) filed an application for a deferred accounting order in Utah on June 21, 2023.
The filing sought to record a regulatory asset associated with damages it may be required to pay to plaintiffs in litigation against the Company regarding the Oregon wildfires in 2020.
RMP also requested that the Utah Public Service Commission (Commission) delay 1 consideration of the approval of this deferral until the costs and the impact on the financial stability of the Company are more fully known, as well as requesting that a confidential technical conference be held to which no other parties could attend. PacifiCorp also filed applications for deferred accounting in the other five states it operates in.
UAE filed comments urging the Commission to allow key parties to attend the technical conference, which it approved, as well as urging the Commission to dismiss the application because it was premature since the Company does not yet know the amount of any actual damages it may be required to pay.
After meeting with UAE, the Division of Public Utilities, and the Office of Consumer Services, who also opposed the filing, PacifiCorp subsequently withdrew its application on August 22.
Demand-Side Management
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UAE is a charter member of the DSM Steering Committee and the DSM Advisory Group and regularly participates in meetings and efforts to evaluate proposed DSM programs and surcharges.
UAE supported RMP’s new load control program that was introduced in 2022 for the Commercial & Industrial customers, in which those customers have three opportunities to earn incentives by signing up for the program to be curtailed with and without notice, or a combination of the two.
RMP also filed a time-of-use electric vehicle pilot program with the Commission in November. In its final 2023 filing with the DSM Stakeholder group, RMP noted that in 2024 the Company projects the DSM surcharge rate will remain at 3.56%.
But in 2025 PacifiCorp forecasts that the surcharge will need to increase to 3.97%, after which it will continue to climb, because the current surcharge will not cover the increases of the amortization and carrying charges for the accelerated coal depreciation.
Based on projections from recent IRP meetings, we anticipate that DSM programs may need to increase to address the loss of generation from early coal plant retirements and the development of battery storage. UAE remains the only representative of large Utah energy users that actively monitors and participates in DSM activities. 5
LEGISLATIVE
2023 Legislature
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UAE is the only industrial energy representative that plays an active role each year at the Utah Legislature on issues of relevance to large energy users. During the 2023 Legislative Session UAE followed and participated in 19 energy bills. UAE worked on supporting/opposing or shaping the language of several energy bills this year.
Integrated Resource Plan
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The IRP process is designed to identify costs and risks of alternative available resources to allow selection of an optimal mix of resources to be acquired by the utility. Numerous organizations from many states participate in the IRP process, including regulatory agencies, resource developers, public interest/environmental organizations, and parties representing Wyoming coal mining interests.
UAE is one of the few representatives of large energy users active in the IRP process and is the only representative of large Utah energy users. UAE’s primary goal in participating in the IRP is to ensure that PacifiCorp develops a reasonable process to select a resource plan that is the least-cost, least-risk portfolio for consumers, including by ensuring reasonable consideration of all practicable resource options, promoting competition in generation resources, and identifying and minimizing undue biases of PacifiCorp and other IRP participants.
PacifiCorp filed a preliminary version of the 2023 IRP on March 31, 2023, and filed the final version on May 31, 2023. The 2023 IRP has more wind and solar resources than the 2021 version and solar is added much earlier in the planning horizon as compared to the 2021 version, with wind being added later in the forecast.
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The 2023 IRP also reflects the Company’s plan to add much more storage capacity than previously anticipated, with many of the new storage resources being co-located with solar resources. There are also greater non-emitting generation resources, which include nuclear and hydrogen resources that do not exist yet.
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PacifiCorp has moved the start date for the Wyoming Natrium advanced nuclear plant back two years to 2030 and has moved forward to 2032 two proposed nuclear plants in Utah at the Hunter and Huntington coal plant sites. The projected costs of the advanced nuclear projects are unknown.
The IRP process has become more complex with the increase in intermittent resources and with the diverging state policy goals between the western and eastern PacifiCorp states. It remains more efficient to conduct resource planning as an entire six-state system, but the diverging state policy goals make this difficult.
UAE and other stakeholders are actively engaged in the IRP process to ensure that PacifiCorp does not allow policies adopted in other states to create increased cost burdens for Utah ratepayers. In addition, PacifiCorp had to address and respond to the new Ozone Transport Rule as adopted by the Environmental Protection Agency (EPA), which required the reduction of NOx emissions from fossil fuel plants in Utah.
After issuing the 2023 IRP, a federal appellate court stayed the implementation of the new Ozone Transport Rule while further litigation over the implementation of the rule was pending. While PacifiCorp need not comply with the new Ozone Transport Rule while it is stayed, the order staying implementation of the Rule could be lifted before the 2025 IRP is due. In addition, the EPA also proposed new rules limiting greenhouse gas (GHG) emissions from coal and gas plants across the country, including those in PacifiCorp’s fleet.
The new GHG emissions rule is expected to become final 4 in the summer of 2024, pending litigation, and PacifiCorp will then be required to plan for that rule in future IRP cycles.
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On December 13, UAE filed recommendations to the Commission that it decline to acknowledge PacifiCorp’s 2023 IRP, which the Commission did.
Multi-State Protocol
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UAE remained very active in the multi-state cost allocation process (MSP) among PacifiCorp’s six states and is the only active participant representing large Utah energy users. In 2020 the MSP stakeholders reached an interim agreement that continues the cost allocation protocol that has been used for several years.
That interim agreement was set to expire in 2023, but PacifiCorp filed applications to extend the 2020 Protocol until December 2025 while stakeholders negotiate a longer-term solution. Each of the six states has a share in developing the new protocol. All six state commissions had to approve the protocol extension.
The Utah PSC approved the proposed extension on July 27. MSP meetings continued throughout 2023. The protocol relies on dynamic, rolled-in allocations and a 75/25 demand/energy split for transmission and generation resources. The MSP process is significantly complicated by legislation and goals in Oregon and Washington that mandate elimination of coal resources from their resource mixes.
Laws passed in each state effectively require that the rate base in those states cannot include coal assets after 2029 in Oregon, and 2025 in Washington. Early in 2022, PacifiCorp provided a strawman proposal and identified a different production allocation factor method. The dollar amounts allocated to each state using this system vary from year to year.
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Continued
ENVIRONMENTAL
Environmental Issues
UAE monitors and evaluates GHG issues and represents industrial interests in regional and statewide GHG-related initiatives. At the regional level, UAE tracked developments and actions taken by the EPA on carbon issues as they evolved under the Biden administration, as well as rulings on methane, ozone designations, regional haze, and in other areas, and how they might impact Utah industries. UAE intends to continue to monitor and comment on EPA and regional rules as they evolve.
Multi-State Protocol Con't
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PacifiCorp proposed a two-coincident peak method, with one peak from the summer and one from the winter. Under that proposal, the allocation to each state would also be fixed, which creates problems if one state’s load increases and another state reduces its capacity.
Another concern UAE identified is that there needs to be a pricing method for situations where one state needs to lean on other parts of the system for either demand or energy. To address those concerns, UAE worked with the Wyoming Industrial Energy Consumers (WIEC) to develop a solution.
Also, CAISO is developing a locational marginal pricing mechanism. UAE and WIEC believe locational pricing is needed to dynamically allocate costs and to recognize state choices in system resources.
PacifiCorp is working with the UAE/WIEC proposal and calculating a series of projections using this method. The outcome of the MSP negotiations will significantly impact Utah commercial and industrial 3 customers.
UAE is the only entity representing large Utah power users that participates actively in all MSP meetings and negotiations. UAE participation is critical to determine and mitigate impacts of proposed cost allocation changes for large Utah energy users.
Service Quality Working Group
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During RMP’s 2020 General Rate Case (GRC), several parties objected to various proposals as having insufficient factual and analytical support. RMP and others suggested that a working group be formed to discuss these proposals more fully after the conclusion of the GRC and before the filing of the next rate case.
The Commission approved this recommendation and ordered the creation of such a working 2 group. UAE has continued to represent its members in the meetings to address the topics identified by the working group.
Parties continued to meet throughout the first half of 2023 to discuss the topics being addressed by the working group, which included Advanced Metering Infrastructure, advanced rate design, grid modernization, classification and allocation of costs associated with transmission and generation plant, etc.
UAE provided a couple of presentations on cost-of-service methodologies and Schedule 32 rate design and debated various proposals put forward by other parties that would have adverse consequences to UAE members.
Unsurprisingly, parties were not able to come to consensus on any of the issues, primarily because any change to the status quo would create winners and losers among the parties. The working group sessions culminated in a Staff report documenting the issues that were addressed and concluding that the collaborative was “useful and informative but offered no real solutions to the topics addressed in RMP’s most recent rate case”.
NATURAL GAS
DEU Acquisition
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Dominion Energy, Inc. announced on September 5, 2023, that it had agreed to sell all of its natural gas utility assets, including Dominion Energy Utah. Other assets included in the sale are The East Ohio Gas Co., Public Service Co. of North Carolina, Inc., Dominion Energy Wyoming, and Dominion Energy Idaho.
The sale also includes Wexpro Co., which develops and produces gas reserves, as well as Dominion’s gas storage assets in the west. The buyer, Enbridge, Inc., is an oil and gas pipeline operator based in Calgary, Alberta. The sale of Dominion’s assets will require approval from the Utah Commission.
It is unknown at this point how the sale might affect customers either in the short term or the long term. The 2016 transaction through which Dominion Energy acquired Questar Gas posed several potential risks to ratepayers and resulted in a settlement stipulation in which
UAE worked with other parties to get Questar to agree to withdraw its pending application for a general rate increase and an agreement that no new general rate case would be filed until 2019. UAE will actively participate in any docket seeking to approve the sale to Enbridge.
DEU Tracker, IRP and DSM
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Among other things, UAE monitored Dominion’s IRP, DSM, and task force processes, and analyzed Dominion’s pass-through, infrastructure tracker, daily imbalance charges, and other filings. UAE evaluates and, when appropriate, challenges Dominion practices relating to curtailment, penalties, transportation contracts, application of the Dominion tariff, and other matters.
A recent Dominion filing that would provide the ability for customers to purchase carbon offsets is a new concern that UAE will continue to evaluate and oversee for the intervention group.