Avista Corp. will raise electric and gas rates in Washington in the new year and again in 2014 under an agreement with the Washington Utilities and Transportation Commission.
Following months of negotiations between the Spokane-based utility and state regulators, Avista customers will pay 2 percent more for electricity and 3.7 percent more for natural gas beginning next Tuesday, New Year’s Day.
The increases are well below what Avista proposed last April to cover higher costs to maintain and upgrade generation plants, power lines and gas pipelines. The company had requested a 9 percent increase in electric rates and 7 percent hike in gas rates, which together would have collected an additional $51 million a year.
But in the agreement announced today, the commission will permit Avista to raise rates again a year from now. Electric rates will go up another 3 percent and gas rates less than 1 percent in 2014. Those increases will expire Jan. 1, 2015, and Avista agreed not to seek further rate increases to take effect before that date.
In a news release today, Dennis Vermillion, president of Avista Utilities, said, “The decision is positive for both our customers and our shareholders, providing for cost recovery over the next two years from investments made to update our energy delivery systems. It gives our customers more certainty in their energy rates and keeps their energy prices at some of the lowest levels in the Northwest and the nation.”
Avista will raise an additional $19 million a year with the rate increases that kick in next week.
The electric rate increase will be 3 percent on average for electric customers, raising $13.6 million, but it will be offset by the return of $4.4 million sitting in an “energy recovery mechanism” account, resulting in a net increase of 2 percent. This mechanism refunds customers when power supply costs are below the amount included in rates.
The 3.7 percent increase in gas rates will bring in an extra $5.3 million for Avista.
The following round of rate increases, on Jan. 1, 2014, would bring in another $15.5 million for Avista.
The Washington Attorney General’s Office and the UTC staff both challenged Avista’s arguments for higher rate hikes. The Public Counsel Unit of the AG’s office recommended far less than Avista had sought, calling the original request “an unjustified burden on customers.” The UTC staff recommended an overall revenue reduction of $1.3 million.
The commission received 165 public comments on Avista’s rate increase proposal – 134 opposed, 31 undecided and none in favor.
Avista has 237,000 electric customers and 149,000 natural gas customers in Eastern Washington.
The utility calculated the impact of the new rates on average residential customers, with the ERM rebate factored in.
Beginning Tuesday, an electric customer using an average of 989 kilowatt-hours per month would see an increase of 1.5 percent, or $1.20 per month, for a revised bill of $78.69.
And even though gas rates overall are increasing, an average natural gas user will see the monthly bill go down a bit because of proposed changes in the rate structure. So a customer using an average of 68 therms per month will see a rate decrease of 0.6 percent, or 38 cents per month, for a lower monthly bill of $60.37, Avista said.
For 2014, an average user will pay an extra $1.60 a month, for a total of $80.29, for electricity, and an additional 57 cents, to $60.94, for natural gas. Those estimates assume an ERM rebate of $9 million that year.