January 28, 2011 - Utah power prices

Earlier this month, I noted that low power prices in Utah are attracting development and jobs to that state.  For example, the National Security Agency chose Utah to site a new 1 million square foot data center that may consume up to 65 megawatts of power - electricity that is generally cheaper in Utah than in many other states.  (The EIA reports that the September 2010 average all-sector electricity price in Utah was just 7.42 cents per kWh, significantly below the U.S. average of 10.24 cents per kWh for that time period.)

Now, PacifiCorp, operating as Rocky Mountain Power in Utah, has requested permission from the Public Service Commission of Utah to increase prices by an overall average of 13.7 percent. Rocky Mountain Power describes this price request as "necessary to serve our Utah customers’ growing electricity needs and to comply with environmental requirements".  In a 4-page PDF, Rocky Mountain Power points to increasing demand in Utah, and forecasts continued increases in demand based on forecasts of economic growth.  (As I noted last year, energy consumption has traditionally been viewed as directly correlated to GDP.)   Rocky Mountain Power states that building new facilities (generation and transmission) is more expensive than older facilities: "Our newest power plants are primarily natural gas and wind projects. While among the lowest cost options today, either one is about twice as expensive as the generating plants built in the 1970s and early 1980s."  Finally, Rocky Mountain Power points out, "Compared with our largest industrial customers, the company’s returns are modest and in line with other electricity providers."

The Public Service Commission of Utah will now consider Rocky Mountain Power's request.