January 28, 2009 in City

Avista rates face appeal

Attorney general targets increases that started Jan. 1
By The Spokesman-Review
 

Washington’s 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 people’s budgets,” said Simon ffitch, chief of the Office of the Attorney General’s Public Counsel Section, which represents Avista ratepayers.

The appeal, ffitch said, focuses on the electricity and natural gas rates that went into effect Jan. 1. Over the course of this year Avista anticipates the rate increases will add $37.3 million to its bottom line. In court records, ffitch argued that this year’s rate increase 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 increases, 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 customers. 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 in essence amounts to decades of retroactive trespassing charges. Those fees –about $39 million – are reflected in Avista’s new rate request.

Avista late last year agreed to pay as much as $168 million over the next half-century to compensate the Coeur d’Alene Tribe for storing water for hydropower generation on the tribe’s submerged land in Lake Coeur d’Alene.The storage allows Avista to regulate the flow of water through the utility’s six Spokane River dams.

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 was filed with the commission.

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,” Avista spokeswoman Debbie Simock said.

Normally Avista, the WUTC staff, the Attorney General’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 Washington Utilities and Transportation Commission for further consideration, or Avista could be ordered to issue refunds.

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