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Utahns may want to start tinkering with their household budgets in preparation for what could be a $117 million increase in electricity rates beginning in September.

Rocky Mountain Power, the company that provides most Utahns with the energy to run televisions, refrigerators and other electrical appliances and devices, has reached a preliminary agreement with the state's Office of Consumer Services and the Division of Public Utilities to settle its current rate case.

The announcement came prior to what was to be at least two days of public hearings set to begin Wednesday. The various parties then went behind closed doors to hammer out final terms of the proposed settlement.

Although those terms were still in flux late Wednesday, The Salt Lake Tribune has learned from several people close to the talks that company negotiators and those representing the state's consumers are discussing settling on a rate hike of $117 million, an increase that would raise the typical Utahn's electricity bill about $5.50 a month.

"We do not have a number yet," said Dave Eskelsen, a spokesman for Rocky Mountain Power who declined to address dollar amounts. "But we may have something to say by [Thursday]."

In January, Rocky Mountain Power had asked the Public Service Commission (PSC) for permission to boost its rates by $232.4 million, a figure that, at the time, represented the largest rate-hike request in the company's history. The utility, though, subsequently lowered its request to $185 million due to what it described as lower cost projections.

A $117 million settlement would lower the rate increase even further, giving the company a rate increase of approximately 7 percent instead of the 11 percent jump that a $185 million rate hike would represent.

Rocky Mountain Power was preparing to argue before the PSC starting Wednesday that it needed a big increase to help it deal with steadily rising power-production costs. It also said it needs to upgrade and expand its existing generating facilities to handle its Utah customers' increasing demand for electricity.

In testimony filed earlier this year, Peter Eelkema, the company's senior consultant for load and revenue forecasting, projected overall electricity demand in Utah will increase 10 percent from June 2011 through July 2012.

The PSC canceled Wednesday's hearing at the request of the power company, which indicated it expected to file a settlement agreement as early as Thursday. The PSC has scheduled a hearing Aug. 3 to consider the settlement proposal.

Michele Beck, director of the state's Office of Consumer Services, said of Thursday's settlement discussions: "If we are successful in working out all the details, I believe we will have an agreement that will be very favorable for Utah's consumers."

Utahn Claire Geddes, an independent utility watchdog, said she generally doesn't favor utility rate-case settlements, but she believes the Office of Consumer Services will strike a good deal for Rocky Mountain Power's residential customers.

"They have some pretty tough negotiators now, and that hasn't always been the case in years past," she said. Twitter: @OberbeckBiz