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Docket Number: UE-111048 and UG-111049
Puget Sound Energy electric and natural gas customers to pay more for energy service
Electric customers to receive annual bill credits from sale of renewable energy credits
OLYMPIA, Wash. – Electricity bills for Puget Sound Energy (PSE) residential customers will increase by 3.2 percent while natural gas bills will rise by 1.3 percent as a result of action taken by state regulators today. New rates go into effect May 14.
The Washington Utilities and Transportation Commission (UTC) is allowing PSE to raise electric rates by $63.3 million a year and $13.4 million for natural gas rates, substantially less than the $161 million and $32 million, respectively, the utility originally requested last June. The last PSE rate increase approved by the commission was two years ago.
The average PSE residential electric customer using 1,000 kilowatt hours-per-month will see their electric bill increase by $3.30, for a bill total of $102.56. The typical natural gas customer using 68 therms a month would pay $1.08 more, for a revised bill of $86.09.
“The commission’s responsibility in general rate case proceedings is to determine an appropriate balance between the needs of the public to have safe and reliable electric and natural gas services at reasonable rates, and the financial ability of the utility to provide such services on an ongoing basis,” said the three-member commission in their written decision.
On June 13, PSE filed a general rate case with the UTC requesting an annual $193 million overall rate increase for both electricity and natural gas service. The commission is ordering $76.7 million overall rate hike for both services.
The basic monthly service charge of $7.25 - paid by all residential customers regardless of the amount of electricity used – will increase by about 23 cents to $7.48. The basic service charge for residential natural gas customers will increase 50 cents a month, from $10 to $10.50.
Beginning Jan. 1, PSE electric customers will receive an annual bill credit for their share of the proceeds and benefits from the utility’s sale of surplus Renewable Energy Credits, or RECs. Commonly called green tags, RECs are intangible assets that represent the right to claim the environmental attributes of a renewable generation project, such as a wind farm or the Cedar Hills Regional Landfill. The average residential electric customer will receive a bill credit of about $8.28 a year. Additional revenues from REC sales will be included annually. A utility is required by state law to generate a certain percentage of its electrical output using renewable energy. If the company has excess generation from renewable resources it can sell the resulting RECs.
“By having the REC revenue returned to ratepayers as a bill credit, it will be more apparent to customers that they derive direct benefits from PSE’s acquisition of renewable generation resources in advance of the time they are needed to satisfy the company’s obligations to meet the state’s Renewable Portfolio Standards,” said the commissioners.
Among the major differences between the company’s request and the UTC order are significant reductions for power costs due substantially to the lower cost of natural gas, and a reduction in the utility’s allowed return on its capital investments. The commission declared prudent PSEs decision to build the Lower Snake River Wind Project in Garfield County, which went into service Feb. 29. That project, designed to meet PSE’s legal obligation to serve a portion of its load with renewable energy, cost $770 million and has a generating capacity of 343 megawatts.
The commission addressed an ongoing problem with inaccurate meters, which has resulted in large retroactive bills for some residential customers. In 2008, the UTC ordered PSE to identify and correct the meter problems; however, the number of retroactive bills remains high. The new performance standard is expected to reduce the longer duration back bills. In addition, all inaccurate meter problems must be resolved within four months for electric meters and six months for natural gas meters from the initial occurrence of the problem.
“New standards are expected to reduce the number of longer duration back bills in an efficient and cost-effective manner,” said the commissioners in their order.
The commission reduced the equity return from 10.1 to 9.8 percent and the overall return from 8.1 to 7.8 percent.
The commission approved a 17-cent-a-month rise in residential electric customer contributions to the company’s low-income bill assistance program, from 59 to 76 cents a month beginning May 14. The UTC approved about a 30 percent increase in the contribution to the company’s low-income bill assistance program.
“The customer testimony heard at our public comment hearings in PSE’s service territory, written comments from customers, and additional evidence in the record make us keenly aware of the struggle PSE’s customers face as they balance their needs for basic goods and services against their limited financial resources,” said the three commissioners in their written order. “This situation is significantly worse for the area’s low-income residents.”
The UTC rejected PSE’s request to establish a Conservation Savings Adjustment, a proposal to recover revenue losses the utility attributes to its conservation programs.
The commission received 778 public comments on PSE’s rate-increase proposal – 733 opposed, three in favor and 42 undecided.
Bellevue-based Puget Sound Energy serves 1.1 million electric customers and 756,765 natural gas customers in parts of Snohomish, King, Pierce, Lewis, Thurston and Kittitas counties.
The UTC is the state agency in charge of regulating the private, investor-owned electric companies in Washington. It is the commission’s responsibility to ensure regulated companies provide safe and reliable service to customers at reasonable rates, while allowing them the opportunity to earn a fair profit.
Editor’s Note: A copy of the UTC staff recommendation is available at the commission’s website: www.utc.wa.gov.