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Docket Number: UE-110876 & UG-110877
State regulators conditionally approve settlement of Avista rate request
Electric, natural gas rates will increase in two steps over the next two years
OLYMPIA, Wash. – State regulators today conditionally approved a multi-party settlement agreement that will allow Avista to raise electric and natural gas rates for the next two years for customers in Washington.
The Washington Utilities and Transportation Commission (UTC) accepted a settlement that allows Avista to implement a rate increase for electric and natural gas customers over the next two years. New rates will go into effect Jan. 1, 2013.
Beginning in 2013, Avista will be allowed to collect an additional $13.6 million or 3 percent on average for electric customers. This increase will be offset by the return of $4.4 million currently in the “Energy Recovery Mechanism” (ERM) account, which is designed to recover, or refund to customers, changes in some power supply costs that are above or below the amount included in rates. As a result, customers will see a net increase of 2 percent in January.
For natural gas customers in 2013, Avista will be permitted to increase rates by $5.3 million, or 3.7 percent on average.
In addition, the commission will permit the utility to increase electric rates by $14.4 million in 2014 and natural gas rates by $1.4 million, which is about 3 percent on average for electric customers, and less than 1 percent on average for natural gas customers. However, the UTC modified the settlement to make the 2014 rate increase temporary, expiring on Jan. 1, 2015. If ERM balances are sufficient, Avista is required to return $9 million to electric customers to help lessen the impact of the rate increase.
Avista has agreed not to file for further rate increases to be effective before 2015. The commission will allow Avista the opportunity to earn a 7.64 percent rate of return, not the 8.25 percent the company originally requested.
“Avista claims that the two-step increases outlined in the settlement will provide its customers more certainty in their energy rates for the next two years,” said the commissioners. “Avista also contends that the two-step rate increases, combined with a “stay out” provision preventing the company from filing for new rates that would become effective prior to Jan. 1, 2015 will break the yearly cycle of general rate case filings.”
The average increase for residential electric customers in 2013 will be $20.28, or a monthly bill of $1.69. In 2014, the average increase for residential electric customers is $20.64, or a monthly bill increase of $1.72. These rates include a $2 increase in the monthly basic service charge.
The average increase for residential gas customers in 2013 will be $32.40, or $2.70 per month. Beginning Jan. 1, 2014, the typical customer’s monthly bill will rise by 57 cents. These rates include a $2 increase in the monthly basic service charge for all residential customers.
Avista or any of the other parties in the case, has 10 calendar days to file for reconsideration of the case with the UTC, or 30 calendar days to appeal the decision to Superior Court.
On April 2, Avista originally requested an increase in electric rates of $41 million, or 9 percent. The company also asked for more than $10 million, or 7 percent, in additional natural gas revenues. A multi-party settlement was filed Oct. 19.
The commission found that Avista’s power supply costs, including the Palouse Wind Project in northern Whitman County, were prudent and allowable in customer rates. In approving the settlement, the UTC required the utility to file a capital expenditure report to identify the company’s plans for infrastructure replacement, including replacement of natural gas pipeline.
In addition, the utility must keep track of revenue from the sale of surplus Renewable Energy Credits (RECs) that is above the amounts already being returned to customers. 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. All revenues from the sale of RECs will be returned to ratepayers.
Beginning in 2013, the UTC approves an additional $176,000 in electric and natural gas contributions to the Low-Income Ratepayer Assistance Program (LIRAP). Starting in 2014, $131,000 more would be available for the LIRAP program for low-income electric and natural gas customers.
The commission received 165 public comments to date on the Avista rate increase proposal – 134 opposed, 31 undecided, and none in favor.
In addition to the UTC staff and the company, three other parties signed the settlement agreement. They include: Northwest Industrial Gas Users, Industrial Customers of Northwest Utilities and The Energy Project.
Spokane-based Avista serves more than 237,000 electric and nearly 149,000 natural gas customers in Washington.
The UTC is the state agency that regulates private, investor-owned electric and natural gas utilities 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.