Avista plans to raise rates again this winter, but not as much as the Spokane-based utility first proposed six months ago.
A typical customer in Washington would pay $2.10 more for electricity and $3.62 more for natural gas each month starting Jan. 1, 2015, under a negotiated rate settlement announced Monday.
The Washington Utilities and Transportation Commission will meet this fall to vote on the agreement. Customers can weigh in on the proposal at two public hearings in Spokane County next week.
Avista proposed significantly higher overall rate increases in February, prompting ratepayer advocates to counter with calls for Avista to lower its base electric rates in Washington.
The settlement agreement is fair and reasonable for customers, Avista and its shareholders, said Dennis Vermillion, president of Avista Utilities.
“The agreement is the result of concessions and compromises by all parties on a number of issues to arrive at an outcome that is supported by all parties,” Vermillion said in a statement Monday. “It supports Avista’s efforts to continue to make key capital investments in our utility infrastructure as well as recover the operating costs of serving our customers.”
A residential electric customer using an average of 965 kilowatt-hours per month would see a 2.6 percent total bill increase, to $82.19. That includes a proposed 50-cent increase in the monthly basic charge, to $8.50.
A natural gas customer using an average of 65 therms per month would see a 5.9 percent increase, to $64.81. That includes a $1 increase in the monthly basic charge, to $9.
The rate hikes would bring in an additional $7 million a year in electric revenues and $8.5 million in gas revenues, Avista said. That’s down from the $18.2 million and $12.1 million in new electric and gas revenues anticipated in the original proposal.
Greater spending on capital projects is the major driver in raising rates, with most of the money going to expand and replace equipment, facilities and older energy delivery systems, the utility said.
In February, Avista proposed raising residential rates 6.1 percent for electric service and 8.5 percent for gas. At that level, customers would have paid an additional $4.89 for electricity and $5.23 for gas each month.
Utilities commissioners received 117 public comments on Avista’s proposal – one in favor, eight undecided and 108 opposed.
The state attorney general’s office and the UTC staff last month both called for Avista to pare down its proposal, citing changing business conditions, including Avista’s ability to borrow money at more favorable interest rates for capital projects to upgrade aging dams and replace other equipment.
The parties also supported smaller profits for shareholders. They recommended profits in the 8.75 percent to 9 percent range, while Avista seeks profit levels of 10.1 percent for its investors.
Avista reached the proposed rate settlement with the UTC staff, the public counsel section of the attorney general’s office, Northwest Industrial Gas Users, Industrial Customers of Northwest Utilities and The Energy Project. Their recommendation to approve the settlement agreement is not binding on the commission.
The settlement agreement includes an additional $333,574 for energy bill assistance to more than 12,000 low-income customers each year.
Avista serves more than 241,000 electric and nearly 152,000 gas customers in Washington.