The Phase III Hearing on DAO Docket Issues (24-035-04) regarding RMP's Rate Case took place on March 23, 2025, focusing on the proposed excess liability insurance (ELI) expenses and related financial adjustments. The meeting addressed RMP's request for a deferred accounting order (DAO) to recover significant ELI expenses incurred prior to the test year, amounting to $185.7 million for the total company, with $82 million allocated for Utah.

RMP also sought approval for the deferral of approximately $104.4 million in ELI premiums incurred since 2023, which had previously been denied in an underlying DAO proceeding. The utility proposed a new insurance cost adjustment (ICA) rider to recover these expenses, suggesting that the surcharge could support a self-insurance program to mitigate potential higher commercial premium costs in the future.

Concerns were raised regarding the substantial increase in RMP's ELI expenses compared to similar utilities, largely attributed to the James v. Pacific Court verdict, which found RMP grossly negligent in causing wildfires in Oregon in 2020. A recommendation was made to limit the allowed ELI expense for the test period to $61.7 million, significantly lower than RMP's proposal, to protect Utah ratepayers from the financial impact of the court's ruling.

The discussion highlighted the need for a rehearing to assess whether RMP's actions were a primary cause of the increased premiums and whether sufficient evidence had been presented to support their claims. It was concluded that RMP had not met its burden of proof regarding the impact of the court verdict on their ELI expenses.

The proposed ICA rider was criticized as an example of piecemeal rate-making, which could allow RMP to adjust rates without comprehensive scrutiny of overall financial needs. Concerns were raised that this approach would shift financial risks from shareholders to customers and reduce RMP's incentives to minimize costs.

In summary, the commission was urged to reject the proposed DAO and ICA rider, with recommendations for adjustments to ensure fair allocation of costs and to consider reducing RMP's authorized return on equity to reflect the reduced financial risk associated with the proposed rider. The meeting concluded with a call for careful consideration of these financial implications for Utah ratepayers.