Rocky Mountain Power asked the Utah Public Service Commission to allow recovery of sharply higher wildfire excess liability insurance (ELI) premiums, saying the market changed after recent large wildfire liabilities. The company said it suspended dividends and managed capital to cover increased exposure; its chief financial officer, Nikki Koblia, summarized the company’s position and confirmed company filings and rebuttal testimony were unchanged since they were submitted.

Why it matters: The company proposed adding roughly $185.7 million of total-company ELI premium into the cost pool that funds rates, with a Utah-allocated share the company calculated at about $82.2 million. Division of Public Utilities (DPU) experts and other witnesses told commissioners that a large portion of the premium increases may be tied to recent litigation and company-specific paid losses rather than only to generalized market-wide risk. If the commission reduces the portion of premiums allocated to Utah customers, it could lower the amount Rocky Mountain Power is allowed to recover from Utah ratepayers.

What commissioners heard: DPU’s underwriting witness Peter Kelly (FTI Consulting) told the commission that modern underwriting is discretionary and that insurers can and do incorporate trial verdicts and paid liability history into pricing. Kelly said insurers often treat losses paid under liability coverage as evidence of some level of negligence and therefore as a driver of premium increases; he used paid wildfire liability claims above an internal threshold to estimate the share of premium growth plausibly tied to negligence and recommended adjustments to the company’s numbers. DPU’s actuarial witness John Gleba (FTI Consulting) presented an alternate allocation approach based on catastrophe-model relative risk indices (Verisk data) and scaled to Pacificorp market shares; his analyses produced a much smaller Utah allocation than the company’s overhead (SO) factor.

Rocky Mountain Power pushed back. The company emphasized that the James verdict (the Oregon trial often discussed in the hearing) is not in its paid loss history and that its parent company has taken corporate actions (for example, suspending dividends) to manage capital and insurance buying. Counsel for the company questioned the DPU witnesses’ use of national averages and industry models, and asked whether the division’s experts had reviewed state-specific or local data before drawing conclusions.

Evidence and disputes: Parties introduced industry reports and insurer filings. Rocky Mountain Power relied on its SO allocation method (the protocol it has used across jurisdictions), while DPU and its experts submitted Verisk model output and a separate actuarial allocation that reduced Utah’s share (Gleba produced an 18.6% allocation number in his testimony). During cross-examination, DPU’s Kelly acknowledged his calculations used conservative assumptions and that newly published reports (for example, an Oregon Department of Forestry incident report on the Santiam/Beechey Creek fires) might change attributions of negligence for particular fires if those reports had been available earlier.

Numbers in the record: The company requested roughly $185.7 million of total ELI premium in its filing, $82.2 million allocated to Utah by the company’s SO method. DPU witnesses described alternate cost pools and illustrative allocations: one DPU approach reduced the total pool to about $164 million and, after applying adjusted allocation percentages, produced a much smaller Utah dollar amount (DPU’s illustrative number cited in testimony was about $23.5 million in one alternative). Kelly also identified a $46 million adjustment in one part of his written work that DPU said could be used as a prudence-style reduction, if the commission chose to pursue that path.

Process implications and next steps: Commissioners pressed witnesses on methods and data (paid-loss vs. occurrence statistics, national vs. state-level data, role of insurer judgment). Several parties urged the commission to preserve the full general-rate-case process for any large, recurring structural change (rather than approving a rider or balancing account that would automatically pass through premium increases). The commission scheduled continued phase-3 sessions focused on wildfire mitigation and insurance design; parties will return to more technical issues (modeling, allocation, and potential prudence reviews) in the next hearings.

Ending: Commissioners heard substantial technical debate about whether higher ELI premiums reflect market-wide risk or company-specific liability history and how to allocate shared insurance costs across Pacificorp jurisdictions. The commission will continue the record in the next phase of hearings and must decide whether to accept the company’s overhead allocation, adopt a model-based allocation, apply prudence-style adjustments to the pool, or adopt other remedies.