The Phase III Hearing on DAO Docket Issues regarding Rocky Mountain Power's (RMP) rate case took place on March 23, 2025, focusing on wildfire-related excess liability insurance expenses. The meeting addressed critical recommendations concerning the company's proposed insurance cost adjustment (ICA) and its implications for customer rates.

The first significant point raised was a recommendation against adopting RMP's proposed ICA, which could allow for future adjustments to the revenue collected from customers for wildfire insurance costs. The speaker argued that these costs should remain part of the base rates rather than being subject to periodic adjustments, emphasizing the need for stability in customer billing.

Next, the discussion highlighted the rising premiums for wildfire-related excess liability insurance in the Western United States. The speaker noted that while premiums have increased significantly, no other utility in the region has experienced such dramatic hikes since 2019. It was suggested that RMP should absorb a portion of these increased costs—estimated at 9.5%—due to its perceived riskiness stemming from past wildfire management performance. The speaker pointed out that the company had not provided sufficient evidence to justify its request for deferral and recovery of these increased premiums.

A specific concern was raised regarding a special charge of $24.5 million imposed by Energy Insurance Mutual (EIM) on RMP due to past wildfire claims. This charge was not linked to the James verdict but was a result of significant losses incurred by EIM from previous incidents. The speaker recommended a downward adjustment of approximately $16.7 million to the test period revenue requirement for excess liability insurance, which translates to about $7.4 million on a Utah allocated basis.

The meeting also addressed RMP's request to defer approximately $112.1 million in excess liability insurance premium expenses, which the company later increased to about $104.4 million on a Utah allocated basis. The speaker advised against allowing this increase, particularly for costs extending into the 2025 test period, suggesting that if any deferral were permitted, a conservative disallowance of 9.5% should be applied.

Finally, the speaker reiterated the recommendation that wildfire-related insurance costs remain in base rates and that the stipulated rate spread from Phase II should apply to the overall revenue requirement. If the ICA were approved, it was suggested that costs should be allocated based on the functionalization to transmission and distribution, reflecting each class's share of gross plant.

In conclusion, the hearing underscored the complexities surrounding wildfire insurance costs and their impact on customer rates, with recommendations aimed at ensuring fairness and accountability in how these costs are managed and recovered. The commission's decisions on these matters will be pivotal in shaping RMP's financial strategies and customer billing practices moving forward.