Proposed Avista rate increase challenged

A Washington assistant attorney general is calling for Avista Utilities’ proposed electric rate increase to be cut by more than 70 percent, saying the computer model the company used to predict power costs is flawed.

Simon ffitch, chief of the public counsel division, which is charged with protecting consumer interests, is recommending that the Spokane energy company only be allowed to raise Washington residential customers’ electric rates by 2.3 percent, down from the 9 percent the company is proposing. The 9 percent increase would raise the average customer’s bill about $5 a month. In addition, ffitch said, the company’s natural gas rates for Washington customers should actually be reduced, by .08 percent, which would put about a nickel a month back in the pockets of customers.

“If you look at the actual underlying power costs, they’re not supported by the computer model,” ffitch said after filing his recommendations with the Washington Utilities and Transportation Commission late Thursday. “The computer doesn’t come up with the right numbers.”

Avista’s rates manager, Don Falkner, said the company’s computer model, called Aurora, is used by several other regulated utilities in the Northwest and was used in Avista’s Idaho rate case last year, with no issues. He said the Washington commission’s staff has not raised any concerns about using this computer model. Falkner said when forecasting power rates, there are “always variables and assumptions,” upon which people differ.

“We think that there are a number of inaccuracies in their analysis,” Falkner said. “A lot of it is not supported by sound evidence.”

In addition, Falkner said, every year Avista applies to the Idaho and Washington commissions for the difference between what the company charges in its rates and what it actually ends up paying for power. Even if lower rates were approved by the commission based on the attorney general’s arguments, the company would still seek to recover those power costs at a later date, Falkner said.

The attorney general’s office originally supported a 4.5 percent increase in electric rates, still half of what Avista wants. Then accounting experts hired by the attorney general’s office reviewed testimony given in the rate case for a group called the Industrial Customers of Northwest Utilities. The attorney general’s office then adopted that group’s position. ICNU first raised concerns with the computer modeling program in August.

Avista filed its proposal to raise electric and natural gas rates for Washington customers in March. Electric rates would have gone up by an average of 12.5 percent, but residential customers would have seen a more than 14 percent increase. Natural gas rates would have risen by less than 1 percent.

In August, Avista reached a settlement with three parties to the case, including the staff of the utilities commission, The Energy Group, an advocacy group for low-income consumers, and the Northwest Industrial Gas Users. The settlement calls for average electric rate increases of 7.7 percent, with residential customers seeing about a 9 percent increase. Larger commercial customers would pay a lower rate. Under the settlement, natural gas rate increases would drop to about .6 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. In addition, company costs are rising for gas, insurance, wages and benefits, Avista officials have said.

An addendum to the proposed settlement calls for the new rates to take effect Jan. 1. The utilities commission will hold a public hearing in Spokane on Oct. 11 from 5 to 7 p.m. at the Spokane Airport Ramada Inn. A decision is expected within the following months.

The company’s proposed rate increase is different than the request it filed recently to pass through the higher costs it is paying for natural gas. That request would affect both Washington and Idaho customers and would increase natural gas rates by more than 23 percent. The commission is expected to consider that request in late October.