Rocky Mountain Power has asked state regulators to approve a 4.48% rate increase for all customers — a change that could remain in place for nearly a decade. Unlike previous rate hikes aimed at covering operational costs, this proposal would finance a specialized self-insurance wildfire fund designed to help the utility manage extreme losses from catastrophic, utility-related wildfires.
Why the Utility Is Requesting a New Rate Increase
A Law Passed in 2024 Triggered the Proposal
The company’s latest request is tied to legislation approved by the Utah Legislature in 2024. The law gives major utilities permission to create a restricted fire fund, supported by a ratepayer-funded surcharge, to prepare financially for major wildfire-related liabilities.
Rising Insurance Costs After Major Legal Settlements
Sen. Scott Sandall (R-Tremonton), sponsor of the legislation, said commercial insurance premiums have skyrocketed. Insurance became especially difficult to secure after PacifiCorp, Rocky Mountain Power’s parent company, reached a settlement with nearly 400 plaintiffs over deadly Oregon wildfires from 2020.
Sandall explained that purchasing traditional insurance would raise customer rates even more. Instead, building an internal self-insurance model helps avoid passing extreme premium increases onto customers:
“Rather than pay the extra high cost of the additional insurance to an insurance company, the idea here is to self-insure to a certain degree,” Sandall told Utah News Dispatch.
How Much Will Customers Pay?
Expected Monthly Impact on Households
In testimony delivered in November, Rocky Mountain Power executives clarified that the 4.48% increase would add approximately $3.70 per month to the bill of an average residential user — a maximum increase allowed under the 2024 law.
Total Collection Goals for the Fund
The utility aims to gather roughly $109 million annually, ultimately accumulating close to $1 billion over 10 years to stabilize its wildfire-related financial exposure.
Why the Utility Says the Fund Is Necessary
Rocky Mountain Power argues the surcharge is in the public interest, especially as wildfire risks escalate across the West. The company stated that worsening fire seasons create “unprecedented financial pressure” for utilities serving states like Utah.
Protecting Customers and Future Infrastructure
The company emphasized that a wildfire fund would:
- Support long-term financial stability
- Allow continued investment in expanding infrastructure
- Safeguard the ability to meet rising customer demand
Massive wildfire liability claims, the utility warned, could otherwise jeopardize system expansion and reliability.
How the Restricted Fire Fund Will Function
A Backup, Not a Replacement for Traditional Insurance
The law specifies that this wildfire fund will supplement existing insurance policies, not replace them. Sandall clarified that the account will be completely separate from Rocky Mountain Power’s operational finances and may only be used if a catastrophic wildfire generates liabilities beyond what insurance will cover.
Possibility of Returning Funds to Ratepayers
Sandall noted that if Utah never faces a qualifying wildfire event, policymakers could consider returning the accumulated money to customers:
“If something else comes up in the future where we don’t need it, I’m sure we’ll give it back to the ratepayers.”
Preventing Wildfires Remains a Priority
Sandall stressed that the creation of this self-insurance reserve must not reduce the utility’s commitment to preventing fires. He said Rocky Mountain Power must continue trimming vegetation, clearing lines, and shutting off power during extreme wind conditions to avoid triggering wildfires.
He also pointed out that insurers have become reluctant to cover the company at reasonable rates following Oregon’s 2020 wildfire lawsuit, making a self-insured fire fund the most practical approach.
Context: A Previous Rate Increase Proposal Sparked Controversy
This request follows a widely criticized bid by Rocky Mountain Power earlier this year for a 30.5% residential rate hike. That proposal was forcefully opposed by Gov. Spencer Cox and legislative leaders. The Utah Public Service Commission eventually approved only a 4.7% increase, or roughly $4.31 more per month for the average household.
Sandall reiterated that the wildfire fund is entirely separate from those general rate increases because the collected money will not support routine business operations.
What Happens Next?
The Utah Public Service Commission will hold a virtual conference on Thursday as part of the evaluation process for the proposed 4.48% wildfire-related rate adjustment.
