02-24 11:23 1st Sub. (Buff) H.B. 72
Carl R. Albrecht proposes the following substitute bill:
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Electricity Rate Amendments
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Carl R. Albrecht
Senate Sponsor: Keven J. Stratton
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LONG TITLE
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General Description:
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This bill modifies provisions related to energy balancing accounts and cost recovery by
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electrical corporations.
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Highlighted Provisions:
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This bill:
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▸ defines terms;
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▸ establishes requirements for the Public Service Commission to prioritize Utah ratepayer
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interests when allocating utility costs;
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▸ prohibits cost recovery from Utah ratepayers for facilities and programs primarily
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benefiting other states;
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▸ establishes cost allocation requirements for multi-state utilities;
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▸ creates a framework for generation resource cost allocation; and
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▸ implements a cost-sharing mechanism for prudently incurred actual costs in excess of
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revenue collected.
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Money Appropriated in this Bill:
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None
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Other Special Clauses:
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None
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Utah Code Sections Affected:
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AMENDS:
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54-7-13.5, as last amended by Laws of Utah 2021, Chapter 249
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ENACTS:
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54-4-4.2, Utah Code Annotated 1953
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Be it enacted by the Legislature of the state of Utah:
1st Sub. H.B. 72 1st Sub. (Buff) H.B. 72 02-24 11:23
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Section 1. Section 54-4-4.2 is enacted to read:
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54-4-4.2 . Utah ratepayer interests -- priority -- generation resource allocation.
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(1) As used in this section:
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(a) "Existing share" means the state's share of a generation resource as assigned to the
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state under the allocation method last approved by the commission prior to December
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31, 2025.
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(b) "Generation resource" means an electrical generating facility owned by or under
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contract to a large-scale electric utility.
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(c) "New share" means a share of a generation resource assigned by the commission to
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the state under Subsection (6) procured by a large-scale electric utility after
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December 31, 2025.
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(d) "Share" means the percentage of a generation resource assigned to the state.
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(2) This section applies only to a public utility for which the commission is the governing
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authority.
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(3) Before the commission may approve allocation of costs to ratepayers in the state, a
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public utility that operates in both the state and other states shall demonstrate by a
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preponderance of evidence that:
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(a) the allocated costs provide direct benefits to ratepayers in the state;
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(b) the cost allocation methodology aligns costs with benefits to Utah ratepayers in the
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state; and
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(c) Utah ratepayers are not subsidizing benefits provided to ratepayers in other states.
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(4) The commission may not approve recovery of costs from ratepayers in the state for:
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(a) facilities, programs, or investments that primarily benefit ratepayers in other states;
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(b) compliance with other states' laws or regulations unless directly benefiting ratepayers
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in the state; or
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(c) liabilities arising from events or conditions in other states unless directly related to
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service provided to ratepayers in the state.
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(5)(a) For generation resources in service or under construction on December 31, 2025,
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a large-scale electric utility shall:
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(i) account to the commission for each generation resource as of January 1, 2026; and
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(ii) identify to the commission the existing share for each generation resource as of
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January 1, 2026.
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(b) The commission shall use the existing share described in Subsection (5)(a)(ii)
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throughout the operational life of each generation resource described in Subsection
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(5)(a) when calculating a large-scale electric utility's recoverable costs for:
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(i) capital costs;
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(ii) operations and maintenance costs;
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(iii) fuel costs;
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(iv) deferred tax impacts; and
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(v) other costs or credits related to the generation resource.
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(6) For generation resources procured after December 31, 2025:
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(a) prior to recovering costs for any new share, a large-scale electric utility shall:
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(i) prepare and file with the commission a state-specific resource plan that:
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(A) reflects the energy policies and preferences of the state;
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(B) identifies the risk-adjusted least-cost resources needed to serve the ratepayers
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in the state;
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(C) is independent of other states' policies; and
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(D) may be filed in conjunction with the large-scale electric utility's system-wide
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integrated resource plan;
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(ii) obtain commission approval of the state-specific resource plan; and
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(iii) demonstrate that any generation resource for which the large-scale electric utility
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seeks cost recovery:
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(A) was identified in an approved state-specific resource plan;
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(B) provides direct benefits to the ratepayers in the state; and
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(C) has costs allocated in proportion to the benefits received by the ratepayers in
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the state; and
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(b) if the commission approves procurement of a generation resource, the commission
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shall:
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(i) specify the new share assignable to ratepayers in the state; and
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(ii) use the new share for the operational life of each generation resource when
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calculating a large-scale electric utility's recoverable costs for:
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(A) capital costs;
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(B) operations and maintenance costs;
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(C) fuel costs;
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(D) deferred tax impacts; and
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(E) other costs or credits related to the generation resource.
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(7) For rates set for a large-scale electric utility on or after December 31, 2025, the
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commission shall approve just and reasonable costs for existing shares or new shares of
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generation resources.
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Section 2. Section 54-7-13.5 is amended to read:
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54-7-13.5 . Energy balancing accounts.
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(1) As used in this section:
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(a) "Base rates" means the same as that term is defined in Subsection 54-7-12(1).
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(b) "Energy balancing account" means an electrical corporation account for some or all
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components of the electrical corporation's incurred actual power costs, including:
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(i)(A) fuel;
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(B) purchased power; and
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(C) wheeling expenses; and
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(ii) the sum of the power costs described in Subsection (1)(b)(i) less wholesale
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revenue.
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(c) "Gas balancing account" means a gas corporation account to recover on a
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dollar-for-dollar basis, purchased gas costs, and gas cost-related expenses.
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(2)(a) The commission may authorize an electrical corporation to establish an energy
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balancing account.
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(b) An energy balancing account shall become effective upon a commission finding that
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the energy balancing account is:
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(i) in the public interest;
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(ii) for prudently-incurred costs; and
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(iii) implemented at the conclusion of a general rate case.
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(c) An electrical corporation:
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(i) may, with approval from the commission, recover costs under this section through:
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(A) base rates;
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(B) contract rates;
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(C) surcredits; or
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(D) surcharges; and
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(ii) shall file a reconciliation of the energy balancing account with the commission at
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least annually with actual costs and revenue incurred by the electrical corporation.
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(d) For an electrical corporation with an energy balancing account established before
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January 1, 2016, the commission shall allow an electrical corporation to recover
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100% of the electrical corporation's prudently incurred costs as determined and
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approved by the commission under this section.
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(e) Except in the case of an interim rate request made in accordance with Subsection
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(2)(k), an energy balancing account may not alter:
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(i) the standard for cost recovery; or
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(ii) the electrical corporation's burden of proof.
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(f) The collection method described in Subsection (2)(c)(i) shall:
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(i) apply to the appropriate billing components in base rates; and
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(ii) be incorporated into base rates in an appropriate commission proceeding.
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(g) The collection of costs related to an energy balancing account from customers
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paying contract rates shall be governed by the terms of the contract.
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(h) Revenue collected in excess of prudently incurred actual costs shall:
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(i) be refunded as a bill surcredit to an electrical corporation's customers over a
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period specified by the commission; and
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(ii) include a carrying charge.
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(i) [Prudently incurred actual costs in excess of revenue collected ] For prudently
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incurred actual costs in excess of revenue incurred between December 31, 2024, and
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January 1, 2026, the costs shall:
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(i) be [recovered as a bill surcharge over a period to be specified by the commission]
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allocated as follows:
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(A) 70% shall be recovered as a bill surcharge over a period to be specified by the
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commission; and
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(B) 30% shall be borne by the electrical corporation; and
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(ii) include a carrying charge.
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(j) For prudently incurred actual costs in excess of revenue collected after December 31,
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2025:
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(i) for coal-related fuel costs, an electrical corporation shall recover 100% from
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customers if:
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(A) a captive coal supply exists; or
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(B) a commission-approved coal-related fuel contract exists with a minimum term
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exceeding five years;
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(ii) for wind and solar costs or benefits:
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(A) an electrical corporation shall recover 100% from customers if:
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(I) the electrical corporation uses, for both forecasting net power costs in a
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general rate case and establishing the in-rates level for energy balancing
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account costs, the minimum annual generation level that was assumed when
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determining the prudence of acquiring the resource; and
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(II) the actual generation output equals or exceeds that minimum annual
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generation level that was assumed when determining the prudence of
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acquiring the resource; and
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(B) the electrical corporation shall bear all replacement power costs if actual
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generation falls below the minimum annual generation level;
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(iii) for all other components, including coal-related fuel costs from contracts of less
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than five years:
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(A) the electrical corporation shall recover 70% from customers as a bill surcharge
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over a period specified by the commission; and
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(B) the electrical corporation shall bear 30% of the costs; and
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(iv) all cost recovery shall include a carrying charge.
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[(j)] (k) The carrying charge applied to the balance in an energy balancing account shall
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be:
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(i) determined by the commission; and
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(ii) symmetrical for over or under collections.
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[(k)] (l)(i) The commission may consider an interim rate request made as a part of an
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electrical corporation's filing an energy balancing account.
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(ii) The commission, on the commission's own initiative or in response to an interim
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rate request by an electrical corporation or another party:
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(A) shall hold a hearing on an interim rate; and
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(B) if the electrical corporation or the other party makes the showing required by
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Subsection [(2)(k)(iii), ] (2)(l)(iii), may allow any rate increase or decrease, or a
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reasonable part of the rate increase or decrease, to take effect on an interim
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basis, subject to the commission's right to order a refund or surcharge.
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(iii) The electrical corporation or the other party shall make an adequate prima facie
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showing that:
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(A) the proposed interim rate appears consistent with prior years' filings; and
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(B) the interim rate requested is more likely to reflect actual power costs than the
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current base rates.
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[(l)] (m) The commission may issue a final order establishing and fixing the electrical
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corporation's energy balancing account:
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(i) after a hearing; and
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(ii) before the expiration of 300 days after the day on which the electrical corporation
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files a complete filing.
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[(m)] (n)(i) If the commission in the commission's final decision on an electrical
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corporation's energy balancing account finds that the interim rate ordered under
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Subsection [(2)(k)(ii)] (2)(l)(ii) exceeds the rate finally determined in the energy
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balancing account, the commission shall order the electrical corporation to refund
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the excess revenue generated by the interim rate to customers.
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(ii) If the commission in the commission's final decision on an electrical corporation's
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energy balancing account finds that the interim rate ordered under Subsection [
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(2)(k)(ii)] (2)(l)(ii) is lower than the rate finally determined in the energy balancing
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account, the commission shall order the electrical corporation to charge a
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surcharge to customers to recover the revenue not recovered during that period.
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(3)(a) The commission may:
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(i) establish a gas balancing account for a gas corporation; and
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(ii) set forth procedures for a gas corporation's gas balancing account in the gas
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corporation's commission-approved tariff.
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(b) A gas balancing account may not alter:
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(i) the standard of cost recovery; or
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(ii) the gas corporation's burden of proof.
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(4)(a) All allowed costs and revenue associated with an energy balancing account or gas
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balancing account shall remain in the respective balancing account until charged or
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refunded to customers.
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(b) The balance of an energy balancing account or gas balancing account may not be:
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(i) transferred by the electrical corporation or gas corporation; or
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(ii) used by the commission to impute earnings or losses to the electrical corporation
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or gas corporation.
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(c) An energy balancing account or gas balancing account that is formed and maintained
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in accordance with this section does not constitute impermissible retroactive
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ratemaking or single-issue ratemaking.
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(5) This section does not create a presumption for or against approval of an energy
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balancing account.
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(6)(a) An electrical corporation that has established an energy balancing account under
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this section shall report to the Public Utilities, Energy, and Technology Interim
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Committee before December 1 of each even numbered year.
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(b) The report required in Subsection (6)(a) shall provide information regarding:
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(i) the continued 100% recovery of the electrical corporation's prudently incurred
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costs related to the energy balancing account; and
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(ii) any determination by the commission of costs not prudently incurred.
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(7) A large-scale electrical corporation must file a general rate case at least once every three
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years to be eligible for energy balancing account cost recovery.
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Section 3. Effective Date.
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This bill takes effect on May 7, 2025.
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