January 27, 2009 in City

Attorney General challenges Avista rate increases

By The Spokesman-Review
 

The Washington Attorney General has appealed a sharp increase in Avista power bills and aims to unravel the company’s plan to collect an extra $112 million from businesses and residential customers in Eastern Washington.

“We think it’s important, especially during this economy, that there’s not one extra penny taken from peoples’ budgets,” said Simon ffitch, chief of the AG’s Public Counsel Section that represents Avista ratepayers.

The appeal, ffitch said, focuses on the new electricity and natural gas rates that went into effect Jan. 1. Over the course of this year Avista anticipates the rate hikes will add $37.3 million in new money to its bottom line. In court records, ffitch argued that this year’s rate hike should instead be about $28.2 million.

Filed Tuesday, the appeal does not address a second and more costly rate request the company submitted Friday seeking an extra $74.7 million next year. It is an initiative that, when coupled with current rate hikes, would raise rates 18 percent over two years and help Avista achieve an 11 percent profit margin from its regulated utility operations. And it comes at a time, ffitch said, when businesses are pinched and shedding workers.

Avista has acknowledged that its years of rate increases are difficult for ratepayers. The company says it has been upgrading turbines and other equipment at its dams that continue to deliver relatively cheap electricity without emitting greenhouse gases responsible for global warming.

Yet ffitch said the rate increases have been battering customers. His appeal in Thurston County Superior Court alleges that the Washington Utilities and Transportation Commission erred last month when it green-lighted the higher Avista rates.

He said the commission wrongly allows Avista to charge its ratepayers for company expenses such as advertising and charitable donations.

The most serious issue, however, centers on approval of Avista’s plan to have ratepayers shoulder the past costs of using Lake Coeur d’Alene as a storage vessel for its run of dams on the Spokane River.

In the appeal, ffitch argues that Avista cannot charge what are in essence decades of retroactive trespassing charges. Those fees –about $39 million – are reflected in Avista’s new rate request.

The appeal does not take issue with Avista attempting to recover the future costs of using Lake Coeur d’Alene water.

“There’s legal doctrine that says the company can’t go back and assess those past charges on current and future ratepayers,” he said.

Furthermore, ffitch wrote in the appeal that the rate increases were agreed to before expert testimony could be reviewed.

Avista disagrees.

“We believe the WUTC approval of our settlement agreement was well-founded in evidence, was based on sound reasoning and is in accordance with the law,” said Avista spokeswoman Debbie Simock.

Normally Avista, the WUTC staff, the AG’s office and other interested parties reach a settlement that satisfies the company’s need for more money but also provides protections for ratepayers. Appeals are rare, and ffitch said this is the first regarding Avista he can recall.

If a judge grants the appeal, the rate case could be remanded to the WUTC for further consideration, or Avista may be ordered to issue refunds.


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