Rocky Mountain Power CEO and President A. Richard Walje said the rate hike was necessary for several reasons: to help pay for the expansion of the Lake Side 2 natural gas power plant near Orem, for new high-voltage transmission lines, and for equipment upgrades on its existing infrastructure so it meets environmental regulations. He also said that the increase is required because many households are using less electricity than before and more people are generating their own power through alternative resources.
"It's an interesting transition we're going through," Walje said about why changing times have required a rate increase. "The traditional things we did are going away, in a way being replaced."
While the overall use of electricity in Utah has gone up about 1 percent due to more customers moving into the state, Walje said each customer is using less power because of more energy-efficient appliances, the turn to LED light bulbs instead of more energy-consuming incandescent bulbs and newer homes being built with higher energy standards. Even though each customer is using less power, Rocky Mountain still has to maintain its existing equipment as well as building more lines to accommodate its growing base of users. Currently, Rocky Mountain supplies power to 865,000 customers in Utah.
"We're still facing this, 'How much is this going to cost to run all of this hardware while all of this other stuff changes?,'" Walje added. "We recognize the world is going to change, it's just how do we make that transition?"
If approved, this will be Rocky Mountain's third rate increase in the last two years. The company also asked for, and got, a 5.6 percent increase in October 2012 and a 2.8 percent hike last September. All told, Rocky Mountain has raised rates about 50 percent in the last seven years, Walje said.
But another rate increase will be devastating for lower-income families who will not be able to handle another rise in monthly costs, said Tim Funk, housing and utility advocacy director for the Crossroads Urban Center in Salt Lake City, a non-profit community service and advocacy organization for low-income residents.
"The recession going back seven or eight years has been painfully experienced by everyone, especially people in the first three-fifths of the population. The farther down you go on the income scale, the greater the impact has been," he said.
"Right now, any increase in prices, be it energy related or otherwise … that's just going in the wrong direction because they have nothing to spend anyway."
At the same time, he added, federal programs that provide assistance to low-income families are being cut, including the federally funded Home Energy Assistance Target (HEAT) program that helps keep families warm during the winter months.
"Unemployment benefits are being wiped out. You're looking at the reduction of food stamps and the elimination of the HEAT program. I could go on," Funk said. "We're cutting back on the assistance of people in the greatest need."
To aid lower-income families, Rock Mountain has also proposed increasing its own Home Electric Lifeline Program (HELP) credit from $11 to $12.60 per month.
Public hearings about the proposed hike are expected to be held sometime in the summer before the Public Service Commission rules on the rate increase by September.