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Avista ready to appeal rejection of higher rates for electricity and natural gas

Andy Vickers, Avista’s director of generation production and substation support, examines one of two new generators that were recently installed Aug. 24, 2016, at the Nine Mile Dam as part of an $67 million dollar upgrade. (Colin Mulvany / The Spokesman-Review)
Andy Vickers, Avista’s director of generation production and substation support, examines one of two new generators that were recently installed Aug. 24, 2016, at the Nine Mile Dam as part of an $67 million dollar upgrade. (Colin Mulvany / The Spokesman-Review)

Avista Utilities will ask state regulators to reconsider last week’s decision to deny the company’s request for higher rates in 2017, and will take its appeal to court, if necessary, company officials said.

In a ruling that will save Avista’s residential customers about $9 per month, the Washington Utilities and Transportation Commission denied the utility’s request for higher electric and natural gas rates, effective Jan. 1.

Scott Morris, Avista’s chairman and chief executive, said the decision doesn’t allow the utility to recover millions of dollars it spent upgrading aging infrastructure, including major renovations at Spokane River dams.

“It appears the order is not supportive of the company making the necessary investments that will allow Avista to continue to provide safe, reliable service to our customers,” Morris said in a statement. “In addition, this outcome provides no ability for Avista to earn the commission approved allowed return on equity or a fair return for our shareholders.”

If the order stands, Avista’s stockholders could see their earnings decrease by 20 to 30 cents per share next year, which wouldn’t allow for a 9.5 percent return, Morris said.

Avista’s credit rating could also be affected by the commission’s decision, he said.

Spokane-based Avista has asked Washington regulators for annual rate increases for the past nine years, saying the utility’s revenues are flat at a time when Avista is spending hundreds of millions of dollars on capital projects.

In the most recent request, Avista asked for $38.6 million in new electric revenue and $4.4 million in new natural gas revenue.

In a 70-page decision, the commission said Avista was continuing to ask for higher rates without making a strong argument for the additional revenue, or demonstrating that its capital spending was outside of the utility’s control.

Commission Chairman David Danner and Commissioner Ann Rendahl voted against the rate increase, while Commissioner Phil Jones filed a dissenting opinion supporting a smaller increase in Avista’s electric and gas rates.

Staff members for the commission had suggested granting Avista a $20 million increase in electric revenue.

If the commission doesn’t reconsider it’s decision, Avista will appeal the ruling in Thurston County Superior Court, company officials said.