Idaho Evaluates Rate Plan Panel Recommends Increase, But Avista Requested More

The staff of the Idaho Public Utility Commission has recommended Avista Corp. be allowed a $10.2 million electricity rate increase, about 24 percent less than the $13.2 million hike sought by the Spokane-based utility.

The recommendation, which is not binding on the commissioners, sets the stage for the only public hearing scheduled on Avista’s rate application, filed in December.

If Avista’s full request is approved, the average customer would pay $8.48 more per month for electricity.

The hearing will be at 7 p.m., June 8, in the Edgewater in Sandpoint. A technical hearing is scheduled for that day at 9:30 a.m. at the same location.

Commission spokesman Dave Scott said all three commissioners - Chairman Dennis Hansen, Marsha Smith and Paul Kjellander - plan to attend the session, the first involving a general rate increase by Avista in more than 12 years.

The company, formerly known as the Washington Water Power Co., serves 100,000 Idaho customers from Grangeville to Sandpoint.

They pay some of the lowest electricity rates in the nation, but Avista officials say a decade of expenditures to keep up with growth, and higher operating costs, have forced their hand.

The company sought an additional $14.2 million in its original filing, but Rates Manager Tom Dukich said changes were made after consultations with commission experts.

“There weren’t a lot of controversial proposals or adjustments,” he said, despite the long period since the last rate case.

Differences over the appropriate return on equity explain most of the remaining gap between the staff and the company, Dukich said.

The staff recommends 9.073 percent. The company wants 9.45 percent. “We aren’t that far apart,” Dukich said.

Although the increase would keep Avista among the nation’s cheapest providers of electricity, Scott said the application has provoked unusual interest because the timing coincided with the name change to Avista.

Some consumers mistakenly believed a takeover of the company caused the rate filing, he said.

And in April, the company disclosed the compensation package for Chairman Tom Matthews, who took over last July 1.

Matthews received a $1 million signing bonus, a $750,000 salary, plus stock and stock options.

“The commission does not regulate chief executive officer salaries,” Scott said. “That’s not within our scope of jurisdiction.”

He said the hearings are being held in Sandpoint, the north end of Avista’s territory, because customers there have experienced the most volatility in rates.

Avista imposed a four-year freeze when it purchased the Bonner County territory from Pacific Power & Light Co., he said.

The freeze expired Jan. 1, allowing Sandpoint-area customers to pay the same, lower rates other Avista customers in Idaho had been paying.

But as of Monday, a power cost adjustment that cuts the average monthly bill by $1.14 expires, he noted, and now a general rate increase is possible.

Power cost adjustments track Avista’s expenditures for electricity, which fluctuate with the availability of water at its hydro projects.

A commission ruling in the case is unlikely before August, Scott said.

Those unable to attend the Sandpoint hearing can submit written comments before June 8 to: Idaho Public Utilities Commission; P.O. Box 83720; Boise, Idaho; 83720-0074.

Avista officials have said they expect to make a rate filing in Washington later this year.