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Avista rate hike request slashed

Error in modeling software had inflated estimate of future power costs

A software coding error caused Avista Corp. to overestimate its power supply costs in the utility’s recent request to raise rates in Washington, company officials said Monday.

The coding error inflated future power costs by $7.1 million, said Casey Fielder, an Avista spokeswoman. When the Spokane-based utility caught the error in early April, it alerted the Washington Utilities and Transportation Commission and other parties in the rate case.

As a result of the modeling error and several other factors, Avista has decreased the amount of additional electric revenue it is seeking by nearly half – from $33.2 million to $17 million.

The model is widely used by the region’s utilities, including Portland General Electric, Puget Sound Energy and Seattle City Light, Fielder said: “It’s a model we use and trust.”

But a recent update to the software contained the coding error, which skewed cost projections.

The utility’s previous rate cases did not use the version of the model containing the error, she said.

Since Avista filed its request for higher rates with Washington regulators in February, the company has also signed a favorable five-year contract with the Chelan County Public Utilities District for electricity purchases, Fielder said. That contributed to lowering the power costs included in the rate request. In addition, the company agreed to reduce its requested return on equity, or shareholder profits, from 9.9 percent to 9.5 percent.

Those changes are outlined in a partial settlement to the rate case, which still must go before the three-member Utilities and Transportation Commission for a decision. A smaller increase in natural gas revenues also is included in the partial settlement – $11.3 million instead of $12 million.

The parties agreed to update power supply costs two months before new rates would take effect.

Parties to the partial settlement include staff from the Utilities and Transportation Commission; the state Attorney General’s Office of Public Counsel, which advocates for residential ratepayers; the Northwest Industrial Gas Users; and the Industrial Customers of Northwest Utilities.

Several key rate issues must still be resolved, including how Avista will be reimbursed for ongoing capital investment, Fielder said.

The utility will spend about $375 million to upgrade and replace aging equipment in Eastern Washington this year.

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