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Avista rate deal reached

Thu., Nov. 1, 2007

An agreement announced Wednesday by Avista and state regulatory staff scales back a proposed double-digit utility rate increase for the company’s Eastern Washington customers.

The deal does allow an increase that will push the average monthly electric bill $6.39 higher to $70.76, and natural gas bills about $1 higher to $84.49 a month.

The rate increases would allow Avista to collect $33.5 million in new revenues, down from the $55 million originally requested in the spring.

The new 9.4 percent rate bump would be applied beginning in January rather than March.

The Washington Utilities and Transportation Commission must still approve the settlement.

Critics have called Avista’s request excessive, especially in the context of six years of frequent, and substantial, rate increases. Customers already are bearing the rising costs of fuel and other goods, and watching nervously as housing markets struggle.

Simon ffitch, who heads the state attorney general’s consumer advocacy arm – called the Public Counsel Section – and objected to Avista’s rate case, said the agreement helps Avista properly recover money spent on upgrades to its dams and transmission lines.

He wanted the utility’s rate of return lowered from Avista’s proposed 11.3 percent. The agreement settles on 10.2 percent.

Avista spokeswoman Jessie Wuerst said the deal strikes an appropriate balance of ensuring ratepayers retain an affordable, reliable source of electricity and natural gas with Avista’s needs to deliver value to shareholders.

The rate case was announced along with Avista’s third-quarter earnings report.

The company stumbled in the July-through-September period, losing $3.9 million, partly due to the $2.3 million write-down of a turbine the company purchased for backup power – but did not use – in the wake of the 2000-2001 Western energy crisis.

The company also took a $3.8 million hit when the WUTC ruled the utility could not recover a penalty assessed by repaying higher-interest debts early.

Other problems in the third quarter, historically a difficult period, stemmed from warmer weather and low electricity production from its hydroelectric projects.

The company lowered its profit guidance for the remainder of 2007 to between 73 and 83 cents a share, from between 85 cents and $1 a share, said Wuerst.

In 2008, however, Avista anticipates a stronger year with earnings in the $1.35 to $1.55 a share range.


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