We all pay a high price for refusing to modernize our power grid
Last month, Rocky Mountain Power, or RMP, shocked state officials by requesting a 30% rate hike over the next two years. It blamed half of the requested increase on the rising cost of coal. Utah Gov. Spencer Cox responded, “The audacity and lack of awareness with this request seriously calls into question management at RMP. I will do everything I can to make sure a rate increase of that magnitude never sees the light of day.”
Cox shouldn’t be shocked. Last spring, the Legislature passed and the governor signed legislation designed to force Rocky Mountain Power to abandon its plans to shift from coal to lower-cost renewables. In my opinion, there is a straight line connecting the governor’s decision to sign that renewables-blocking legislation and RMP’s requested rate hike.
Most of us realize that burning fossil fuels to produce electricity causes far more harm to human health and the environment than using wind and solar. However, few realize that coal-based electricity is much more expensive than electricity generated by renewables. Simply running an existing coal-fired plant now costs more than building and operating a nearby solar farm of equal capacity. The premium that utilities now pay to use coal rather than renewables averages 30% nationally, but is 50% for RMP’s Utah coal plants, according to national plant-specific cost data compiled in a recent study. From these data, we can calculate that RMP could avoid operating costs of $260 million annually by switching from coal to solar — savings large enough to pay for full battery backup for such solar facilities.
Coal’s huge cost disadvantage reflects two things: 1) decades of rapid improvements in solar, wind and battery storage technology, and 2) hefty financial incentives that the Inflation Reduction Act offers for clean-power projects that utilities can commit to over the next two years.
Through 2026, the Inflation Reduction Act offers Rocky Mountain Power an opportunity to commit to modernizing its grid at a bargain price. If RMP took full advantage of it, it could cut Utahns’ future power bills nearly in half while stimulating large amounts of related capital investment in Utah’s economy. Companies developing artificial intelligence models, their hardware suppliers and other high power-consuming, high-tech businesses are searching desperately for large sources of clean, sustainable power to tap. They are likely to follow Meta’s example and build billion-dollar-plus data centers in our state if we can offer them adequate supplies of the clean, sustainable electric power they demand.
In a Salt Lake Tribune op-ed, Nate Blouin and Sara Baldwin estimated that if Rocky Mountain Power made full use of available Inflation Reduction Act incentives to convert its grid from coal to renewables, it could bring $15 billion in industrial diversification, job creation and tax revenue to Utah. These potential economic benefits dwarf our state government’s various economic stimulus efforts, such as those of the Utah Inland Port Authority. What’s more, the economic development that a clean power grid can be expected to stimulate would be truly sustainable, unlike plans that could produce diesel-powered, highly polluting freight traffic.
Economic forces are pressuring society to make the transition to clean, low-cost electric grids. Standing in the way of this win-win result are the vested interests of fossil-fuel-dependent businesses and the regulatory inertia that their political power guarantees. The bills that the Legislature passed and the governor signed last spring (HB191 and SB224) freed Rocky Mountain Power from any obligation to offer Utah’s ratepayers cleaner, lower-cost electric power if it discourages the continued burning of coal. The only reason cited by our legislative leaders for this was that it is more reliable than renewable power.
Doubts about reliability no longer justify delaying the inevitable shift to renewable power, as South Australia’s experience shows. South Australia is a world leader in grid modernization. It gets two-thirds of its electric power from renewables. In 2022, it integrated 2,000 megawatt-seconds of battery storage into its power grid using advanced system management software. Its upgraded system is proving more efficient and reliable than its former fossil-fuel based grid, saving its ratepayers $150 million in its first two years. RMP could improve the reliability of its grid with similar technology and capture resulting savings.
Those officials must acknowledge the role that they played in bringing about RMP’s requested rate hike. As things stand, it is just a taste of what’s coming for Utah’s ratepayers. I urge our state’s elected officials to take a second look at the evidence and allow Rocky Mountain Power to return to its original plans to transition from dirty and costly coal to cheap and clean renewables. We still have time to modernize our grid and our economy, but time is running out on this once-in-a-generation opportunity. Let’s not let it slip through our fingers.
Malin Moench spent 37 years performing legal and economic analysis for public utility regulators at the federal level. Now retired, he volunteers for nonprofits that focus on protecting public health and the environment.
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