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UTC staff announce two settlements on Puget Sound Energy rate request

Docket Number: UE-220066, UG-220067  

Editor’s Note: This news release reflects the position of staff of the Washington Utilities and Transportation Commission (UTC) and NOT the views of the three-member commission. It discusses a settlement agreement that the commissioners have not yet reviewed. Any positions taken or comments offered by UTC staff regarding this proceeding should be attributed clearly to staff members and NOT to the UTC.   

If approved, PSE would see approximately $350 million revenue increase over two years 

LACEY, Wash. - On Friday, staff of the Washington Utilities and Transportation Commission announced two settlements which, along with the previously announced Green Direct settlement, fully resolve contested issues and reduce PSE’s original request of more than $600 million over two years by almost half.

The first settlement agreement relates to the company’s revenue requirement and several significant policy issues, while the second specifically addresses PSE’s Tacoma Liquified Natural Gas (LNG) plant.

The increase in electric revenue would be $223 million (or 9.7%) in 2023, followed by an additional increase of $38 million (or 1.5%) in 2024. The settlement would also allow PSE to collect an increase in natural gas revenue of $70.6 million (or 6.4%) in 2023, followed by an increase of $18.8 million (or 1.6%) in 2024.

Under the settlement agreements the typical residential electric customer using 831 kWh of energy will see a rate increase of $10.83 or 11.4% in 2023 for an average monthly bill of $105.84, and an additional $1.71 or 1.6% increase in 2024 for an average monthly bill of $107.55.

The typical natural gas residential customer using 64 therms will see a rate increase of $4.93 or 6.5% in 2023 for an average monthly bill of $80.73, and an additional $1.27 or 1.6% in 2024 for an average monthly bill of $82.

The UTC will hold a public comment hearing on Sept. 28 to discuss all of the issues in PSE’s rate case. 

The commission will complete its review of the company’s request and all three related settlements by Dec. 31, and if approved, new rates would go into effect Jan. 1, 2023. 

Revenue requirement settlement

The first settlement includes several terms requiring PSE to consider equity when making business decisions to ensure the equitable distribution of benefits and reduction of burdens to its customers.

The settlement also addresses a number of customer-focused issues, requiring PSE to work with several partner groups to engage customers, improve distribution of low-income assistance, map and address long-term customer overdue bills, and improve low-income conservation and weatherization incentives.

Under the settlement, PSE agrees to a partial write-off of deferred costs, savings, and fee revenues from the coronavirus pandemic, however settling parties agree that PSE can recover the costs for additional customer assistance funds and bills that have been sent to collections in electric and natural gas rates.

Additionally, the settlement addresses environmental and clean energy considerations, including:

  • costs to increase public access to electric vehicle charging,
  • decarbonization research,
  • a pilot program to promote electric heat pump use in home and building heating, and
  • reporting requirements to measure PSE’s carbon emissions.

Finally, if approved, 90 days from the final commission order, PSE will submit updated costs for providing power to customers, with an expected subsequent rate change on Jan. 1, 2024.

Parties to the revenue requirement settlement are UTC staff, Puget Sound Energy, the Alliance of Western Energy Consumers, Federal Executive Agencies, Walmart, Inc, The Energy Project, Kroger, Co., Northwest Energy Coalition, Sierra Club, Front and Centered, Microsoft, and Nucor Steel Seattle, Inc.

King County did not join or oppose this settlement, and the Public Counsel Unit of the Attorney General’s Office — who represents customer interests before the commission — supported the revenue requirement settlement with certain exceptions.

The Coalition of Eastside Neighborhoods for Sensible Energy opposed the settlement.

Tacoma LNG plant settlement

The second settlement addresses Puget Sound Energy’s Tacoma LNG plant, which the company intended, in part, to serve as a peaking resource to ensure it had an adequate supply of natural gas. The settling parties agree that these investments were prudent, allowing PSE to make a later filing to recover those costs through customer rates if the commission agrees.

The settlement also requires PSE to track costs for distributing LNG separately from the facility costs, to ensure that only the customers using the facility pay for it.

Parties to the Tacoma LNG settlement are UTC staff, Puget Sound Energy, the Alliance of Western Energy Consumers, Walmart, Inc., Kroger, Co., and Nucor Steel Seattle, Inc.

Customer advocate groups The Energy Project, the Northwest Energy Coalition, Sierra Club, and Front and Centered did not join or oppose the Tacoma LNG settlement.

The Puyallup Tribe of Indians and the Public Counsel Unit of the Attorney General’s Office oppose this settlement agreement.

The other parties to the rate request did not participate in the Tacoma LNG settlement because it was outside their interests.

Background

In January, Puget Sound Energy filed a three-year rate increase request.

On Aug. 5, UTC staff filed a settlement agreement to address PSE’s Green Direct program that allows corporate and governmental customers — like cities or counties — to voluntarily purchase 100% of their energy from dedicated local and renewable energy sources. 

Bellevue-based PSE provides electricity service to more than 1.1 million electric customers in eight Washington counties: Island, King, Kitsap, Kittitas, Pierce, Skagit, Thurston, and Whatcom. PSE also provides natural gas service to more than 800,000 customers in six Washington counties: King, Kittitas, Lewis, Pierce, Snohomish, and Thurston.  

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.  

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