Three Utah-based power providers — Deseret Generation & Transmission Co-operative, Utah Associated Municipal Power Systems, or UAMPS, and Utah Municipal Power Agency, or UMPA — have asked federal regulators to reject PacifiCorp’s proposal to include about $1.7 billion in wildfire-related liability in its transmission rates.
The wildfires occurred in 2020 and 2022, according to the complaint filed at the Federal Energy Regulatory Commission on July 2.
PacifiCorp has not paid the $1.7 billion in estimated liability, but is seeking to recover it from wholesale transmission customers by passing them through its formula rate in one rate year, the Utah power providers said.
FERC should not assume that the wildfire liabilities were prudently incurred and should launch a separate proceeding to review them, the power providers said.
“PacifiCorp’s effort to shift these massive liabilities from shareholders to ratepayers without a finding that PacifiCorp acted prudently is not an appropriate use of a formula rate, particularly when juries have already determined that PacifiCorp acted with gross negligence, recklessness, and willfulness on the vast majority of claims that have been paid out,” Deseret, UAMPS and UMPA said.
Allowing PacifiCorp to make wholesale transmission customers prepay potential liability violates the Federal Power Act, FERC precedent and accounting rules, according to the power providers. “Even if the costs had been prudently incurred, there remain issues related to rate shock, accounting, and undue discrimination,” they said.
PacifiCorp intends to true up its accounting for the wildfire liabilities when they are resolved, but it is unclear when that will occur, according to the complaint.
Also, it appears that PacifiCorp hasn’t sought to recoup its potential liabilities from retail customers. “There is no justification for PacifiCorp to treat wholesale transmission customers and retail customers differently with respect to wildfire liability claims,” Deseret, UAMPS and UMPA said. “If wholesale transmission customers are the only customer group paying, then PacifiCorp has an incentive to overestimate its wildfire liabilities to pass through the formula rate because it is a guaranteed source of recovery.”
Further, PacifiCorp’s wholesale transmission customers face additional exposure to PacifiCorp’s wildfire liabilities, according to the complaint. About $8 billion in wildfire-related claims have been made in Oregon and California, the power providers said, citing a 2023 annual report at the U.S. Securities and Exchange Commission filed by its parent company, Berkshire Hathaway Energy.
The company’s most recent annual report filed on Feb. 24 indicates PacifiCorp faced an additional $48 billion in wildfire-related claims by the end of last year.
Comments on the complaint are due Aug. 1 at FERC.
