Settlement trims Avista rate increases

Rates will go up less than originally anticipated for Washington customers of Avista Utilities if a settlement agreement hammered out between the company and state regulators is approved.

In March, Avista filed a proposal to raise electric rates by almost $8 per month for the average residential customer in Washington. Natural gas rates would have gone up by $1.50 per month. Commercial and industrial customers also would have seen monthly bills go up, for an average increase of 12.5 percent on the electric side and 1.8 percent in gas.

The proposed settlement, announced Monday, cuts the electric increase to an average of 7.7 percent and the gas rate increase to about 0.6 percent. That means the average residential electric customer would see rates go up about $5.22 instead, and gas by about 57 cents per month.

The case still must go through a public hearing process at the Washington Utilities and Transportation Commission, and any rate increase likely wouldn’t occur before December.

“This presented an opportunity to settle a case where it was relatively straightforward,” said Kelly Norwood, vice president of Avista Utilities. “It made sense to settle and move on.”

However, the Washington attorney general’s office and an organization that represents large industrial customers say the proposed settlement leaves Avista’s rates too high. Both object to the settlement.

“We just felt the settlement … is overly generous based on our analysis to date,” said Simon ffitch, chief of the attorney general’s public counsel unit.

Michael Early, executive director of the Industrial Customers of Northwest Utilities, said many companies were drawn to Eastern Washington due to lower power rates, but that advantage gradually has eroded over time.

“This is just another step in that progression,” Early said. “Avista’s rates are too high.”

But Norwood said rates are set to allow the company to recover its costs of doing business. Some of those costs vary substantially due to factors beyond the utility’s control, Norwood said, but the company tries to set them as “close to actual” as possible.

In addition, the company has proposed boosting its contribution by $600,000 annually to assist low-income people with their bills and contributing $200,000 more per year to energy conservation programs, Avista said in a news release.

In its initial request, Avista proposed increasing its annual electric revenues in Washington by $35.8 million and its natural gas revenues by $2.8 million. The settlement cuts $13.7 million off the electric revenue request. Most of that money – $9 million – results from a reduction in the company’s allowed rate of return on equity.

The company had proposed an 11.5 percent rate of return, said Mike Parvinen, a regulatory analyst for the utilities commission. The settlement holds that rate of return to 10.4 percent.

The settlement also calls for an existing electric surcharge to increase by 1 percent.

Avista has attributed the need to raise rates to the money it has spent beefing up generation and transmission systems, the purchase of a power plant in Oregon, and improvements made at its Cabinet Gorge Dam. Also rising are costs for gas, insurance, wages and benefits, Avista officials have said.

This proposed rate increase follows electric rate increases in Idaho and a boost in natural gas rates in both states.