Avista rate increase coming

Monthly electric bills for Avista Corp.’s residential customers are likely to go up in November. Company officials said the anticipated increase is the result of lower credits from the operation of federal dams.

The Bonneville Power Administration initially expected to give Avista a credit of $19 million to $23 million through its “residential exchange” program during fiscal 2009. Instead, BPA will pay out $3 million.

The program spreads to Northwest ratepayers the economic benefits of federally operated dams on the Columbia and Snake rivers. The money flows from BPA – the dams’ operator – to other utilities and shows up as a credit on the monthly bills of residential and small farm customers.

As a result of the lower BPA credit, Avista expects to raise electric rates by 3 percent in Washington. A household using 1,000 kilowatts of electricity would pay an additional $2.03 on their monthly bill.

In Idaho, the hike would be 6.4 percent, for a $4.81-per-month increase.

Scott Morris, Avista chairman and CEO, expressed disappointment with BPA’s decision to lower the payment. In the recent past, the credit gave customers a 9 to 10 percent discount on their monthly bills.

“We are looking at all options, including legal action, to restore to our customers their fair share of benefits from the federal Columbia River system,” Morris said in a statement.

The 1980 Northwest Power Planning Act created the residential exchange program. However, divvying up the credits between utilities has led to considerable litigation.

For many years, Avista customers didn’t get the credit, because Avista’s operating costs were lower than BPA’s. That changed in 2000, when BPA and investor-owned utilities, including Avista, reached a settlement over the credits.

The settlement was later challenged by public utilities, which felt their credit was too low. In 2007, the 9th Circuit Court of Appeals upheld the challenge to the settlement.

The 9th Circuit ruling led to BPA’s determination that investor-owned utilities had been overpaid, said Chuck Forman, BPA’s residential exchange project manager. As a result, Avista and other investor-owned utilities’ credits were lowered for 2009, he said

BPA and Avista executives will meet this month to see if they can find a resolution to the credit dispute outside of litigation, according to Forman.