What’s Keeping Utah’s Lights On?

Flip a switch, and the lights come on. It seems simple and innocuous, and for many, it’s where the story begins and ends. But energy in Utah is anything but simple. Every phone charged, every movie streamed and every room illuminated comes with a cost. In the Beehive State, more than in most places, that’s paid in carbon.

Utah generates 64% of its electricity by burning coal. That proportion has declined substantially since 2001 (94%) but it still dwarfs the national figure of 23%. Utah has the worst average air quality index ranking of any state and is economically vulnerable as climate change affects snow conditions. A coordinated, concerted effort between residents, local industry and the state government to back cleaner electricity generation is needed, but that’s not what’s occurring.

This reality came into acute focus in October 2020 when the Utah Public Service Commission (PSC) ruled Utah’s monopoly electricity provider Rocky Mountain Power could reduce the amount it pays customers for electricity produced by residential solar by roughly 40% from 9.2 cents per kilowatt-hour (kWh) to 5.969 cents/ kWh in the summer and 5.639 cents/kWh in the winter. The decision was a blow to the residential solar industry in Utah. And while the rate reduction was sold as a compromise between RMP’s original low ball valuation for residential solar of 1.5 cents/kWh and the national average of 22.6 cents/kWh, according Vote Solar, a non-profit advocacy group, there is a huge gap.

The chasm in estimates and the subsequent ruling doesn’t represent reality. “RMP got what they wanted with the decision. They came with an incredible lowball and effectively moved the goalposts, so they can still act dissatisfied with the decision even while kneecapping residential solar in Utah,” said an energy consultant for Berkshire Hathaway Energy, who spoke to us on the condition of anonymity. RMP is a subsidiary of Berkshire.

RMP has been chipping away at residential solar for some time. Prior to 2017, residential solar customers who sent excess power back to the grid were compensated with what’s called net metering, which meant the amount of power generated by customers was paid back to the homeowner, ostensibly paying solar customers the retail rate for energy they produce. RMP argued that the rate wasn’t sustainable because those customers didn’t have to pay for transmission and energy storage, so they pursued the reduced “export credit” of 9.2 cents/kWh for new solar customers as part of a transition program. The change diminished the benefit of new home solar, and installations slowed from more than 12,000 in 2017 to about 3,500 last year.

RMP’s efforts were aimed at avoiding a death spiral for coal production. If more customers are moving to solar, this would, in turn, raise rates for coal, which, in turn, would further drive more customers towards solar. RMP’s monopoly was threatened by a market-based solution available to notoriously frugal customers in a state with more than 300 sunny days per year, so they tipped the scales. Centralized utility monopolies have long been considered prudent because they eliminate overlapping infrastructure—RMP owns all the transmission lines, substations, etc.—but credible, de-centralized competition, like solar, is a threat. RMP managed to set a rate to profit off power generated by residential solar customers.

Utah’s energy monopoly is proving resistant to competitive forces threatening coal, but even when market forces encourage the utility to stray from the status quo, politics can get in the way. RMP is a division of Pacificorp, which runs the Naughton coal-fired power plant in Kemmerer, Wyo, that supplies some electricity to Salt Lake City. Pacificorp’s own 2019 Integrated Resource Plan (IRP) called for the early retirement of two Naughton units within six years, converting one unit to natural gas. Natural gas produces approximately less carbon than coal and it’s more cost-effective. State and local lawmakers are pushing back to prop up the local coal industry against the wishes of both the utility and consumers.

“What we’re hearing are disingenuous solutions,” says Noah Miterko, Policy Associate for the Healthy Environment Alliance of Utah (HEAL). “There are valid concerns about an area’s tax base and peoples’ employment, but saying these jobs are going to be around long term isn’t true. The utility companies and the mining companies know it’s a lie. They’ll keep the jobs around as long as it’s profitable, then declare bankruptcy, give bonuses to the executives and sell the companies off for parts.”

Keeping the Naughton plant operating is just kicking the issue down the road, and continuing to generate power by burning coal will ultimately cost consumers in cash on their energy bills and via environmental calamity. In a way, it’s surprising to see a deeply conservative area pushing for government intervention to prop up a struggling business, and the approach fails to confront a changing reality with solutions that will help the community in the long run.

“The inevitable is coming to a head a few years ahead of schedule. We need to reinvest in these communities economically. It’s not an apples-to-apples comparison, but we’re going to see the same kinds of issues in Carbon and Emery County in Utah eventually, and we need to be ready with solutions,” says Miterko.

But what’s to be done? When a market-based solution threatens the utility, they push back on customers. When the market pushes a utility away from coal towards a more efficient—though still fossil-fuel based—solution, legislatures enter the fray to disrupt adaptation. The climate crisis isn’t waiting on a benevolent form of capitalism to rise, nor is it waiting on an altruistic bureaucracy to act.

“Berkshire will always stack the deck in their favor. At these new export credit rates, buying solar is giving them profitable energy. Unless consumers have the energy storage capacity to directly use the power they’re producing, they’re adding to the utility’s supply at this point,” says the Berkshire consultant.

Miterko was less pessimistic, suggesting homeowners talk to solar suppliers to assess if residential production can work for them. He says the faster we can normalize renewables, the better. While natural gas is preferable to coal, it’s still fossil-fueled based energy. Investing heavily in related infrastructure will lead to the same discussions we’re now having about coal several years down the line.

“If you read how RMP and Berkshire are investing in renewables, it would sound good. But it’s greenwashing,” says the Berkshire consultant. “They aren’t driving change. They’re planning to transition as solutions become more profitable than fossil fuels.”

Essentially, the players are all hedging their bets, but meanwhile, time on the carbon clock is ticking. Miterko concurs: “It’s the business-as-usual plan. Solar and wind are becoming cheaper and more attractive but the transition will be too late for some of our concerns.” Solar subsidies are scheduled to phase out over the next five to 10 years. The subsidies baked into the fossil fuel industry since its inception have never gone away. “Subsidies are designed to help gain a foothold, not prop up an industry indefinitely,” Miterko says.

If anything in Utah will have an effect, there is action regarding electricity production happening primarily at the municipal level. The 2019 Community Renewable Energy Act (H.B. 411) provided cities with the mechanisms to get to net-100% of electric energy from renewable resources by 2030. The Salt Lake City and Park City Councils were early adopters, and by the end of 2019, 24 municipalities comprising nearly one million RMP customers had committed to paying the cost of pivoting to renewable energy sources and removing fossil fuels from their portfolio. That level of participation can compel a utility—even one that’s a monopoly—to change the way they’re investing.

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Tony Gill
Tony Gillhttps://www.saltlakemagazine.com/
Tony Gill is the outdoor and Park City editor for Salt Lake Magazine and previously toiled as editor-in-chief of Telemark Skier Magazine. Most of his time ignoring emails is spent aboard an under-geared single-speed on the trails above his home.

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