Avista electricity rates head higher

Just when those holiday shopping bills start rolling in, Washington customers of Avista Utilities will need to set aside a little more money for electric bills.

On Wednesday, the Washington Utilities and Transportation Commission approved an increase in rates for Avista’s 220,000 electric customers in the state. The new rates take effect Jan. 1 and equate to about a $5 increase on the average residential customer’s monthly bill. The increase will be accompanied by a small jump in natural gas rates – about 58 cents per month for the average household.

“The commission is charged by statute with the responsibility to regulate in the public interest,” said the three-member panel in their written decision. The commission received 378 public comments on the case, 356 of them in opposition to the proposed rate increase. More than 100 of those were on a petition signed by residents of a senior housing complex in Spokane Valley. One commission spokeswoman said that was the largest number of public comments she recalled seeing in a recent rate case.

The increase follows a 24 percent jump in natural gas rates in Washington and Idaho, about $16 per month, which took effect in November. That was a direct pass-through to customers of the higher costs the utility is paying for the commodity and does not affect Avista’s profits. However, the $16 estimate was based on average monthly usage of 70 therms. In a mailing to customers, Avista said that most customers use closer to 125 therms during the winter, which would make bills about $30 higher.

The electric rate case originally was filed in March, when Avista requested an increase closer to 12 percent. Through negotiations, the company and staff of the utilities commission agreed on a settlement, bringing the increase down to the 9 percent approved Wednesday. Two other parties, a low-income consumers’ group, and a large industrial gas-users’ organization, agreed to the settlement.

However, the public counsel section of the attorney general’s office and the Industrial Customers of Northwest Utilities, opposed it, saying only a 2 percent increase was justified.

Avista Vice President Kelly Norwood said the company was pleased with the commission’s action on rates, but not on other parts of the case. Part of the settlement called for a reduction in the amount of losses the company must absorb. Since 2002, the company has been required to absorb its first $9 million worth of losses, with additional losses covered by shareholders and ratepayers. The settlement called for the company to only absorb the first $3 million worth of losses, but the commission rejected that clause.

“We made some other concessions with the assumption that … would be reduced,” Norwood said. “It puts us in a position where we won’t be able to fully recover our costs in 2006.”

Norwood said Avista officials have not discussed whether that will cause Avista to reject the settlement. Parties to the settlement have seven days to accept or reject it. They also have 10 days to file for reconsideration. If any of the parties rejects the settlement, the rate case would restart and could be subject to more hearings, testimony and cross examination. Absent a settlement, rate cases take up to 11 months to resolve.

“It’s hard to know when the commission would make a decision” if the rate case restarts, said Marilyn Meehan, a commission spokeswoman.

Included in the settlement, and approved by the commission, was an increase in funding for low-income rate assistance and conservation programs. An additional $600,000 per year for the next two years will be contributed to rate assistance programs, half of which comes from the company and half from ratepayers, through a fee attached to bills. That fee already was in place, but was diverted to increase funding for those programs.

Avista has attributed the need to raise rates to the money it has spent improving generation and transmission systems, the purchase of a power plant in Oregon and improvements made at its Cabinet Gorge Dam in Montana. Numerous other company costs are rising as well, company officials have said, including gas, insurance, wages and benefits.

The commission approved a 10.4 percent rate of return for Avista investors, agreed upon in the settlement. Many residents who attended a public hearing held in October objected to the rate of return, saying it was too high when they’re struggling to pay bills.