The Washington Water Power Co. has agreed to freeze base rates until the year 2001 in proposed agreements with Idaho and Washington regulators who are reviewing a proposed merger with Sierra Pacific Resources.
The agreement would allow adjustments under certain circumstances, such as lower natural gas prices or a loss of cheap hydropower because of reduced streamflows. The company also would be allowed to rebalance the costs imposed on a specific class of customers such as industry.
The freeze and other conditions are outlined in so-called stipulations negotiated by representatives of the two companies and staff members of the Idaho and Washington utilities commissions.
Community and conservation advocates also signed off on the documents, which were filed in the last two weeks in Boise and Olympia.
Other agreements were filed in Oregon and California. No stipulation has been filed in Nevada, where hearings on the proposal have been scheduled for the last two weeks of June.
The agreements have not been approved by the Idaho and Washington commissioners, who will take testimony on the proposed merger within the next few weeks.
But spokesmen for the Idaho and Washington commissions said very little, if any, opposition has been voiced to the merger, which was announced last June.
Marilyn Meehan of the Washington Utilities and Transportation Commission said the agency has not received a single letter for or against the merger.
All testimony in favor of the deal was due at the Washington commission Monday. Opposition statements are due next Tuesday.
A meeting of all interested parties is set for June 9, Meehan said, when the commissioners could decide whether public hearings in the case are necessary.
A ruling could be released by September.
In Idaho, testimony has already been filed, and a public hearing will be held in Coeur d’Alene June 5. Assistant Attorney General Brad Purdy said a ruling could be made by midsummer.
Commissions can, and do, overrule their staffs, but such decisions are not common. And WWP has maintained generally good relationships with regulators in both states.
The Washington and Idaho stipulations differ only on minor points. Although WWP had included a provision for a five-year rate freeze in its applications for approval of the merger, both commissions sought - and got - an additional year.
Both agreements include assurances that WWP’s low-cost resources, which give customers among the lowest rates in the nation, remain dedicated to its Idaho and Washington service area. Nor will customers suffer if the new utility’s bond rating - both WWP and Sierra Pacific are rated A-minus - is downgraded.
Idaho caps WWP’s return on equity at 12.5 percent until 2001. Half of any earnings over that level must be rebated to consumers.
The Washington agreement contains no cap. Instead, WWP will be required to increase its costs by accelerating the depreciation on past investments in conservation measures and an abandoned effort to build a coal-fired generating plant.
That has the effect of lowering WWP earnings as it and Sierra Pacific start to realize some of the $450 million in savings they project over the next 10 years.
At the insistence of the Northwest Conservation Act Coalition and Spokane Neighborhood Action Programs, WWP will augment its conservation and education programs.