It’s not news utility customers ever like to hear, especially not on one of the coldest days of the year.
Yet Avista Corp. said Tuesday it wants to raise power and natural gas rates in Washington next winter, including a big jump in the basic charge for each service.
If approved by state regulators, the new rates would cost a typical residential customer an additional $4.89 a month for electricity and $5.23 a month more for gas starting Jan. 1, 2015. That’s an increase of 6.1 percent for electric service and 8.5 percent for gas.
The changes would bring monthly bills up to $84.98 for a residential customer using an average 965 kilowatt hours per month, and up to $66.42 for a natural gas customer using an average of 65 therms per month, Avista said.
Greater spending on capital projects is the major driver in the rate request, which the Spokane-based utility filed with the Washington Utilities and Transportation Commission.
Most of the money from the higher rates would be used to expand and replace equipment, facilities and older energy delivery systems, Avista President and CEO Scott Morris said.
“This includes preserving the life of our legacy hydropower projects that have been providing low-cost, renewable energy for over 100 years,” Morris said in a news release.
Avista expects to spend $335 million on capital projects this year, including work on the Little Falls Powerhouse, the Nine Mile Powerhouse and the Post Falls South Channel Dam, all of which are more than 100 years old.
The proposal includes a major change in the basic charge all customers pay.
Instead of $8 a month for each type of service, customers would pay $15 a month for electricity and $12 a month for gas, in addition to their energy use.
On the electric side, however, Avista also proposes slightly lower kilowatt-hour rates, which would somewhat offset the $7-a-month hike in the basic charge.
For gas customers, the use rate would increase slightly, meaning customer bills will go up by more than the $4 monthly increase in the basic charge.
The basic charge covers fixed costs, including meters, transformers, customer service and billing, Avista spokeswoman Debbie Simock said.
“If we charged exactly what those costs are, it would be $36 a month,” Simock said. “So we’re just asking, with that increase from $8 to $15, to get a little closer to what those actual costs are for us.”
The basic charge last went up by $2 a month at the start of 2013. Avista in late 2012 was approved for rate increases that took effect in 2013 and again last month. At that time, the utility agreed not to change its rates again until 2015.
While the electric base rate increase actually would be 3.8 percent, two customer rebates are set to expire at the end of this year, and Avista proposes a new rebate related to the sale of renewable energy credits starting next year. All those changes result in an increase of 6.1 percent.
If approved, the new rates would boost Avista’s electric base revenues by $18.2 million a year and natural gas base revenues by $12.1 million a year.
“When a rate case is announced like this, it seems like it’s something that will happen immediately, but it will not. It’s an 11-month process,” Simock said.
And customers will be able to weigh in on the proposal at meetings hosted by the Washington Utilities and Transportation Commission, she noted.
Avista serves more than 241,000 electric and nearly 152,000 gas customers in Washington.