Utility’s insurance has jumped by $115 million, and customers may be on the hook to pay

Rocky Mountain Power, Utah’s largest electricity provider and part of the PacifiCorp system, is seeking to pass on millions of dollars in added insurance costs to its Utah customers due to increased liability from western wildfires. Last summer, the company requested state regulators to account for a twelvefold increase in liability insurance costs, with 44% of PacifiCorp’s customers based in Utah, potentially leading to an extra $50 million in insurance costs for customers in the state.

The 2020 decision by PacifiCorp’s parent company, Berkshire Hathaway Energy, to revise its liability insurance costs came after a significant lawsuit in Oregon. In June of that year, a jury found the company liable for $73 million in damages related to Oregon wildfires in 2020, a case in which thousands more could file for compensation, potentially reaching billions in damages. Industry and consumer advocates are now questioning whether the stockholders, including billionaire Warren Buffett, should be responsible for covering these costs, as opposed to ratepayers.

While Rocky Mountain is relying on state law to justify passing on these costs to customers, it has faced pushback from the state Office of Consumer Services, which argues that the company must prove these costs have had an extraordinary impact on its earnings. The increase in insurance rates is relatively small compared to estimated losses from wildfires, which has led to a significant financial impact on the company.

Rocky Mountain’s CEO has noted that wildfire liability is an existential threat to utilities across the West and has emphasized the benefits of being part of a larger, six-state system. However, the company recently faced criticism for its state-required wildfire plan in Utah, which was based on outdated data.

Overall, the issue raises important questions about the allocation of costs and the responsibilities of energy companies in the face of escalating environmental challenges, including the ongoing risk of wildfires. This context is critical for understanding the wider implications of Rocky Mountain’s attempts to pass on insurance costs to its Utah customers.

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