This is an archived article that was published on sltrib.com in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
The Utah Public Service Commission had two days set aside for a hearing on Rocky Mountain Power's plan to supply electricity to a proposed Facebook data center based on a unique rate structure.
But it took just 45 minutes Thursday for the PSC to approve the request after officials from the Utah Office of Consumer Services and the state Division of Public Utilities supported the proposal.
In written and sworn testimony, experts for those agencies said they found that Rocky Mountain Power's existing ratepayers would not be impacted negatively by terms of the agreement to provide large amounts of energy from renewable sources to a half dozen Facebook data-center buildings planned for West Jordan.
The city is working hard to get Facebook to develop a $1.5 billion data center on 232 acres near the intersection of New Bingham Highway and State Route 111. It is proposing tax incentives that could reach $260 million to attract the social-media giant to build computerized warehouses for storing digital information.
Salt Lake County opposes the incentive as excessive, but it will have only two votes among eight on a "Taxing Entity Committee," formed of representatives of all the agencies that impose property taxes on that acreage.
The committee is scheduled to decide Monday whether to approve West Jordan's proposal to create an Economic Development Project Area (EDA) to help finance the project, although that could change.
The PSC's OK allows Rocky Mountain Power to pursue an alternative rate-making structure, whose framework was established by the Legislature earlier this year in the Sustainable Transportation and Energy Plan.
This option, Rocky Mountain Power chief commercial officer Gary Hoogeveen said in prepared testimony, "is easy to implement and allows for customization of rate design and structure" for companies whose capacity needs are 5 megawatts or greater.
Facebook has not disclosed how much power it expects to use annually, but there is an expectation it would qualify under the rate schedule for companies needing that amount.
Hoogeveen said large retail customers will decide where to locate facilities based on the energy they can get from suppliers.
"If [Rocky Mountain Power] is not responsive to the needs of these customers and does not develop product offerings to meet their needs," he said, "customers will choose to locate in other states and Utah customers will miss out on the economic benefits associated with these customers."
Because there is not enough renewable energy available immediately to serve Facebook's needs, Hoogeveen said, the rate structure approved Thursday allows the social-media company to buy power from Rocky Mountain through the first years of the contract while renewable resources are secured to cover long-term operations.
"After the early years," he added, "Facebook meets the majority of its generation-supply needs with customer-dedicated renewable resources paid for entirely by Facebook."
Cheryl Murray, a utility analyst in the Office of Consumer Services, said two experts were brought in for an expedited evaluation of Rocky Mountain Power's numbers because the utility was seeking approval by Aug. 31.
One of those experts, Philip Hayet from Roswell, Ga., determined the contract's provisions, sealed from public review because they are proprietary, would generate enough revenue that "other retail customers would not ultimately have to subsidize the contract."
Hayet warned, however, that the contract's "unique structure" could result in Rocky Mountain Power facing similar deals in future contracts.
He and the Office of Consumer Services recommended the PSC require Rocky Mountain Power to file annual reports for six years after Facebook formally occupies the data center to verify whether the funding plan "benefits or causes harm to existing customers."
Murray said at Thursday's hearing that those reports "will better enable us to understand the appropriateness of rate terms in future cases."
Added provisions also relieved her office's concerns that customers could leave the system early and avoid paying for resources obtained specifically for them, she noted.
A final vote?
West Jordan has scheduled a meeting of the Taxing Entity Committee, which has final say on approving the project, on 3 p.m. Monday in the Council Chambers of West Jordan City Hall, 8000 So. Redwood Road. It is unclear whether that might be delayed because of continuing consideration by the State School Board. › XX