October 18, 2007 in Business

Avista rate request blasted

By The Spokesman-Review
 

How to comment

Avista customers may comment on the proposed rate increase until Dec. 7. Write to: WUTC, P.O. Box 47250, Olympia, WA 98504. Or e-mail: comments@utc.wa.gov.

Avista’s request to raise electricity and natural gas rates in Eastern Washington is excessive and should be rejected, the Washington attorney general’s consumer advocacy division said in testimony filed Wednesday with the Washington Utilities and Transportation Commission.

“Avista customers have seen frequent, substantial increases in their electric and gas bills over the last six years,” said Simon ffitch, chief of the attorney general’s Public Counsel Section.

The company filed its request for higher electricity and natural gas rates last April, this time to be repaid for upgrading its decades-old river dams in North Idaho and Montana that provide much of the power lighting the Inland Northwest. Also, it wants to be repaid for ongoing transmission line improvements and extensions as the region continues to attract new residents and use more electricity.

The request has once again collided with a customer class of businesses and residents increasingly pinched by rising costs for everything from gasoline to milk to health insurance while pay has not kept pace.

The double-digit increase sought by Avista – it hopes to collect an extra $144 a year from the average homeowner – is partly due to a 16-year rate freeze the company employed during the 1980s and 1990s. In the aftermath of the West Coast energy crisis of 2000-2001 and faced with necessary improvements to its system, Avista has turned to customers for relief and reimbursement.

This latest request would give Avista an extra $55 million a year by raising electricity rates by an average of 14.9 percent for the average homeowner. That’s about $10 more per month, boosting average bills to $74.44, said Liz Andrews, the company’s manager of revenue requirements. The company also wants to add $2 a month to the average natural gas bill.

The percentage increase figure has changed slightly since Avista first filed its rate case in April, explained Brian Hirschkorn, manager of retail pricing. That’s because the Bonneville Power Administration this summer withdrew a $6.69 monthly bill credit awarded to customers of the Pacific Northwest’s investor-owned utilities, such as Avista.

In his testimony, ffitch recommends chopping $20 million from Avista’s $55 million request.

Furthermore, ffitch said he opposes several other proposals in Avista’s filing.

One is the company’s proposal to raise its allowable rate of return from 10.4 percent to 11.3 percent.

Avista wants the ability to widen its margin on shareholder profits – a move executives say would help it meet the dividend levels of peer companies, thereby pleasing Wall Street, attracting new investors and speeding its financial recovery.

Ffitch said current market conditions and favorable regulatory decisions have decreased shareholder risk and thus the rewards for investing in a safer company should be less. He argued that the rate of return should instead be lowered to 9.3 percent.

Other objections raised by ffitch include Avista’s proposal to charge customers a late-payment fee of 1 percent per month; the cost effectiveness of using automated meters; and a push for so-called “mini rate cases” that would allow Avista to alter rates between the larger general rate cases.

The Public Counsel Section and Avista already reached a nonbinding settlement that would trim the rate request by $7.3 million, in part by reducing the amount of money Avista wants to recover to pay executive salaries. The company also has agreed to pay more for energy efficiency programs and to help poor people pay their bills.

If his other proposal cutbacks are adopted by the WUTC, Avista’s rate hike request would be trimmed by 45 percent. The gas request would be reduced by 90 percent.

Ffitch’s opinions are among many the WUTC will consider in deciding how much more Avista can charge its ratepayers.


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