Avista’s top five executives made in excess of $10.5 million in 2016, and the company reported net income of $83.9 million in the first half of 2017.
Those dollar figures are a concern to ratepayers who attended a Wednesday Idaho Public Utilities Commission workshop about a rate hike the electricity and natural gas utility is seeking.
Avista should be lowering rates as it takes advantage of a glut of natural gas in the market, said Ken Krahn, one of about 10 members of the public at the meeting.
“The middle class can only afford to pay so much,” Krahn said.
The commission is considering a proposal that would raise electricity rates by 7.9 percent Jan. 1 and 4.2 percent on the same date in 2019 for Avista’s Idaho customers. Natural gas rates would increase by 5.7 percent on Jan. 1 and 3.3 percent on Jan. 1, 2019.
Avista needs more money because it is completing projects that increase its generation capabilities at a relatively low cost as it replaces aging infrastructure.
The company’s push for more revenue comes at a time when the amount its customers pay for power has been relatively stable. Electricity rates have risen by about as much as natural gas prices have fallen with the increased prevalence of fracking.
An average monthly bill for an Idaho customer using electricity and natural gas would have been $138.90 in 2016, just $3.92 more than in 2006.
Every cost Avista has will be examined thoroughly by the commission staff before they make a recommendation to three commissioners who will decide the case, said Joe Terry, an auditor with the commission.
“We do look at (salaries),” Terry said. “They would probably tell you I look at them too much.”
Avista and other power utilities are allowed to earn a reasonable rate of return on their investments. But they must follow a number of rules that don’t apply to other businesses, such as serving all customers within their territories, said Bentley Erdwurm, a utility analyst with the commission.
Determining the reasonable rate is one of the tougher parts of what the commission staff does. They look at a number of factors, including what similar size utilities in other parts of the country earn, commission staff said.
Having Avista’s profit in line with others in the industry benefits customers by keeping the costs of borrowing money affordable, Terry said.
If a utility is performing below industry standards, investors are less likely to add it to their portfolios, and lenders typically demand higher rates, Terry said.
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