Accomplishments in 2009

Since 1986 UAE has been an active participant in all regulatory and legislative activity that affects electricity and the natural gas in Utah.

Legislation
The Utah Association of Energy Users played an active role throughout 2009 in both the legislative and regulatory arenas, making significant contributions on several fronts. UAE played a key role in altering a proposed Senate Bill 75 which was initiated by Rocky Mountain Power (RMP) and supported by Questar Gas Company (QGC) in the 2009 legislature in an effort to make the Utah ratemaking process much more friendly to utility interests. UAE participated in lengthy settlement discussions and provided a number of proposals and recommendations. Ultimately, a compromise was reached to allow utilities to file single item rate cases to recover costs of certain major plant additions and to clarify and change various other ratemaking statutes. UAE and other ratepayer advocates negotiated for a requirement that minimum filing requirements be developed for both general and single item rate cases to ensure that adequate information would be timely provided by utilities seeking to change rates. UAE actively participated in the development of minimum filing requirements under PSC rulemaking procedures.

2008 Rocky Mountain Power Rate Case
RMP filed a general rate case late in 2008, with a majority of the proceedings occurring in 2009. RMP sought an 8.6% rate increase of $116 million. UAE was an active participant in settlement discussions that resulted in a $45 million rate increase. UAE was also instrumental in securing a rate spread settlement that was more favorable to large customers than RMP’s recommended rate spread.

2009 Rocky Mountain Power Rate Case
RMP filed a second rate case in mid 2009. The initial filing proposed a $120 million increase, based on a 2010 end-of-year test period. UAE’s success in achieving test periods that are closer in time over the last several rate cases played an integral role in RMP’s willingness to stipulate to roll the test year back six months to June 2010, which reduced the requested increase by $53 million. RMP also agreed that it would not file another general rate case until January 2011. UAE filed testimony on and participated actively in the revenue requirement, cost of service and rate spread phase of the case, which occurred in late 2009. A PSC order on this phase is expected soon. UAE continues to participate in the rate design phase of the case, which will take place over the first several months of 2010.

Rocky Mountain Power Energy Cost Adjustment Mechanism
RMP again filed a request for approval of an energy balancing account in Utah in 2009. UAE successfully requested that the case be bifurcated to first determine whether an ECAM is in the public interest of Utah customers. If the Commission finds an ECAM to be in the public interest, a second phase will determine how the ECAM should be designed. UAE’s argued that an ECAM is not in the public interest of Utah ratepayers at this time under current circumstances. The PSC is expected to issue a ruling on Phase I in the near futures.

PacifiCorp Integrated Resource Plan/RFP Process
UAE carefully monitored RFP proceedings in 2009. RMP notified the PSC in early 2009 that it was terminating a proposed acquisition stemming from a 2008 RFP. UAE questioned the prudency of RMP’s resource acquisition strategy and participated in the evaluation of PacifiCorp’s 2009 IRP filed in May. UAE continues to monitor ongoing RFP activities.

GreenHouse Gas
UAE also continued to monitor and evaluate greenhouse gas issues in 2009. UAE represented industrial interests in both regional and statewide greenhouse gas related initiatives. At the regional level, UAE tracked developments of the Western Climate Initiative (WCI) and federal legislation, including the Waxman-Markey bill, and how they might impact Utah industries. UAE also kept members abreast of actions taken by the Environmental Protection Agency on carbon issues as they evolved.

Multi-State Process
UAE remains the only MSP participant representing Utah businesses in the MSP process, which deals with multi-state allocation issues. The primary focus of MSP activities in 2009 was an evaluation of the impact on Utah ratepayers of the “Revised Protocol” MSP allocation settlement which was adopted several years ago. It appears that Revised Protocol has resulted in a greater share of company resources being allocated to Utah than was anticipated at the time of its adoption. But for the “MSP Rate Mitigation Cap,” which was adopted as a direct result of UAE’s efforts, Utah customers would be paying a greater share of total company costs than initially anticipated. Revised Protocol and various alternative interstate allocation options will continue to be evaluated and negotiated during 2010.

Demand-Side Management
UAE actively participated in DSM activities during 2009. As a result of a $20 million collection shortfall stemming from a residential insulation program, RMP requested that the DSM surcharge be increased to 6.1%. UAE filed a complaint with the PSC asking for suspension of the proposed increase and a re-evaluation of the DSM cost collection mechanism. The PSC suspended the requested increase and established a two-phase docket, first to determine how to deal with recovery of the $20 million shortfall, and second to re-examine DSM program design. UAE helped negotiate a stipulation to limit the increase in the DSM surcharge to about 4.6% in order to amortize the negative balance over a 20-month period. UAE has also participated in the program design phase, including recommendations for an industrial customer DSM opt-out and for a revised cost-collection procedures. This process is continuing in 2010.

For information about current regulatory activity that impacts your company, contact Kelly Francone @ 355-4365 or kFrancone@energystrat.com