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System upgrades behind rate-hike requests, Avista says

Tue., March 23, 2010, 5:11 p.m.

Avista Utilities is seeking to raise the price of electricity and natural gas for its customers in both Washington and Idaho.

The requested rate hike would add $10.62 to the average Eastern Washington homeowner’s monthly electric bill and another $4 a month for natural gas, according to Avista.

In Idaho the request would add $11.40 to the average homeowner’s electric bill and $2.77 a month for natural gas.

The Spokane-based utility signaled earlier this year that its rates need to rise. Executives said the extra money is needed to pay for improvements to the company’s dams, transmission systems and network of neighborhood distribution lines, along with locking in new long-term contracts with outside electricity providers to meet the needs of a growing population.

The company filed its requests with regulators in both states Tuesday. Specifically, Avista seeks a 13.4 percent rate hike for electricity and 6 percent for natural gas in Washington, and a 13.1 percent electric rate increase and 4.1 percent increase for natural gas in Idaho.

If the requests are approved, Avista would collect an extra $63.8 million in revenues from Washington ratepayers. In Idaho, Avista would collect an extra $34.7 million.

Scott Morris, Avista’s chairman and chief executive, acknowledged the sting higher rates would have on residents at a time of double-digit unemployment and a struggling economy. He said in a news release that the company has conservation programs designed to help lower energy usage along with financial assistance in paying bills.

Kelly Norwood, Avista’s vice president who oversees state and federal regulations for the utility, said the company also has taken measures to trim costs.

“We know the economy is tight,” he said in an interview, noting that Avista has a hiring freeze in place and has shelved plans for a new office building, opting instead to remodel and occupy a building in Spokane Valley. “We’re in a situation where people have said to us `Tighten your belt,’ and we have.”

However, Avista also reiterated its position that ratepayers must shoulder much of the significant costs — up to $200 million annually — of upgrading and preserving assets such as replacing 50-year-old equipment at the Cabinet Gorge and Noxon Rapids dams.

These projects, Norwood said, provide Avista customers with some of the cheapest electricity in the country.

This new filing includes paying for electricity generated by the Lancaster power plant, which burns natural gas, along with replacing a handful of cheap power contracts set to expire.

Rate cases typically take 11 months to be decided by Washington regulators and seven months by Idaho.

Last year Avista reported profits of $87.1 million – an 18 percent gain over the $73.6 million in profits recorded in 2008.

Executives have credited the strong performance, in part, on the company’s ability to recover its costs of upgrading the electrical system.



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