FERC Faces Pressure to Reject PacifiCorp's $1.7 Billion Wildfire Liability Inclusion in Transmission Rates
Key Insights
Three Utah power providers have formally requested FERC to disallow PacifiCorp from passing $1.7 billion in potential wildfire liabilities to wholesale transmission customers.
The complaint argues that shifting these costs to ratepayers without a prudence review violates federal regulations and FERC precedent, especially given prior findings of gross negligence.
Concerns include potential "rate shock" for customers, discriminatory treatment compared to retail customers, and the risk of PacifiCorp overestimating liabilities for guaranteed recovery.
The dispute highlights the escalating financial burden of wildfire risks on utilities and the contentious issue of how these costs should be allocated between shareholders and ratepayers.
Three Utah-based power providers—Deseret Generation & Transmission Co-operative, Utah Associated Municipal Power Systems (UAMPS), and Utah Municipal Power Agency (UMPA)—have formally petitioned the Federal Energy Regulatory Commission (FERC) to reject PacifiCorp's controversial proposal to incorporate approximately $1.7 billion in potential wildfire-related liabilities into its wholesale transmission rates. Filed on July 2, 2025, the complaint asserts that PacifiCorp, a subsidiary of Berkshire Hathaway Energy, is attempting to prematurely recover these estimated costs from wholesale customers, stemming from wildfires in 2020 and 2022, without a requisite finding of prudence by the regulatory body. This move has significant implications for ratepayer burden and sets a critical precedent for how climate-related liabilities are managed within the regulated utility sector.
The complainants argue that PacifiCorp's strategy to pass through these massive, unpaid liabilities via its formula rate in a single rate year is both illegal and unprecedented under the Federal Power Act and FERC accounting rules. They contend that FERC should initiate a separate proceeding to thoroughly review the prudence of these wildfire costs, especially given that juries have already determined PacifiCorp acted with "gross negligence, recklessness, and willfulness" on a substantial portion of claims already settled. Allowing such a pass-through, they claim, would constitute an "undue discrimination" against wholesale transmission customers and could lead to severe "rate shock."
Furthermore, the Utah power providers highlight a perceived disparity in treatment, noting that PacifiCorp does not appear to be seeking similar recovery from its retail customer base. This differential approach, they suggest, creates an incentive for PacifiCorp to potentially overestimate its wildfire liabilities, as the wholesale transmission formula rate would provide a guaranteed source of recovery. The complaint also points to the broader financial exposure, citing Berkshire Hathaway Energy's 2023 annual report, which indicated approximately $8 billion in wildfire-related claims in Oregon and California. The company's most recent annual report, filed February 24, revealed an additional $48 billion in wildfire-related claims by the end of last year, underscoring the escalating scale of the challenge.
The outcome of this FERC proceeding, with comments due by August 1, will be closely watched across the energy industry. It will not only determine the allocation of significant financial burdens but also shape future regulatory approaches to climate-induced risks, potentially influencing utility investment in grid hardening, wildfire mitigation, and the financial stability of power providers operating in high-risk zones.