Avista requests rate increase

Avista Utilities is seeking higher electricity rates that would cost the average homeowner an extra $120 a year.

If approved, the 15.85 percent boost in power rates would be the first since January 2006, according to the company’s request filed Thursday with the Washington Utilities and Transportation Commission. The company also wants a 2.27 percent rate increase for natural gas. That would average $1.93 more per month for ratepayers.

Together the rate increases would deliver $55.5 million in new cash to Avista.

Kelly Norwood, an Avista vice president, said the company wants to begin recovering the tens of millions of dollars spent upgrading its dams, coal plant and transmission lines across its service territory.

The company attempted to recover some of those funds last year, but the WUTC rejected that rate-hike request. Norwood said the company anticipates that the higher rates would go into effect early next year after the commission reviews the filing, holds public hearings and rules on the merits of the request.

Advocates for the region’s poor called Avista’s move a budget-buster.

“It’s just plain not doable,” said Cathy Mann, executive director for the nonprofit Voices for Opportunity, Income, Childcare, Education and Support.

“There’s a real disconnect here between what they want and what people can pay,” Mann said.

Avista should look at its salary structure, which paid the company’s top three executives more than a million dollars each last year, before it turns to ratepayers for more money, she said.

“This is a company that does a lot of good,” she said, “but how can a corporation built on the community do this? It will not just hurt people, it will cost every low-income organization trying to help.”

She acknowledged that her organization and many others receive financial support from Avista, but called for a stop to rate hikes that she said are wreaking havoc for those in poverty.

Most of the people this hurts “aren’t on the dole,” she said. “They are the working poor. Real people (who are) struggling.”

Avista has noted that most of the money paid to executives comes from corporate funds no longer tied to the utility’s ratepayers. The company said rewarding executives with pay equal to or higher than competing firms helps ensure loyalty, stability and a well-run company able to retain top employees.

The rate request will help pay for the region’s power system, which is important to its economic and social well-being.

“We continue to make significant investments in our generation, transmission and distribution infrastructure to provide for long-term, efficient and reliable energy supplies and high-quality service for our customers,” said Avista President Scott Morris, who is due to take over as chief executive officer at the beginning of next year.

The rate filing would affect only Avista’s Washington customers. About 70 percent of the firm’s retail power and natural gas sales come from state residents.

The company has yet to file a new general rate case that would affect its Idaho customers.

Norwood said some of Avista’s higher costs are attributable to the region’s population growth. More people are using more power, and Avista must have adequate supplies to meet that demand. Sometimes, he said, that means Avista must buy power on the open market. More often, it means Avista has less power to sell on that lucrative open market because its customers are using more for such things as appliances, computers and electronics, such as big-screen televisions.

It all adds up to a utility trying to squeeze as much electricity as possible out of its existing dams and power plants through upgrades, which are cheaper and more feasible than building new facilities. For example, upgrades to turbines at the Noxon Rapids Dam on the Clark Fork River in Montana are boosting the project’s electricity capacity by 30 percent.

If Avista’s rate requests are approved, the company would achieve a 9.3 percent rate of return – higher than the company currently is authorized by regulators to make. It’s a number that would help Avista build more stockholder equity directly tied to the utility.

The pending sale of Avista’s energy trading unit, expected to fetch perhaps $200 million, should help Avista. But the company said building a financially stronger utility would serve customers and shareholders well by ensuring that it has fully recovered from the 2000-2001 electricity crisis.

The bottom line, Norwood said, is that Avista has made significant investments in equipment, and that power supplies cost more.

“We’re aware of the effect the prices have on our customers,” he said. The company, he added, tries to assist its low-income customers and has been working to cut business costs.

Robin Waller, spokeswoman for Spokane Neighborhood Action Programs, said any rate increases mean trouble for the poor.

“Gas prices are way up and now this,” she said. “I’m not sure people can take any more. There’s real suffering out there and frankly, we don’t have enough money to help people out.”

SNAP, which receives funds from Avista, runs an energy-assistance program, but that program is out of money to help offset this winter’s winter heating bills. The nonprofit group gave an average of $480 to about 9,300 Spokane families during the past seven months.

Drops in state funding made money scarce, and SNAP helped about 1,700 fewer households this year pay their heating and light bills, Waller said. About 94 percent of people receiving SNAP help are Avista customers.

“We’re down to praying for warmth because we’re done,” Waller said.