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Spokane Public Comment Hearing Scheduled on Avista’s Proposed Rate Case Settlement Attend the Public Comment Hearing · There will be a public comment hearing in Spokane on Tuesday, October 11, 2005. The hearing will be held at the Ramada Inn-Spokane Airport, 8909 Airport Rd., Spokane WA. · The hearing begins at 5:00 pm. · The public can also submit their comments to the WUTC via e-mail at comments@wutc.wa.gov or by mail to: WUTC, P.O. Box 47250, Olympia, WA 98504.
Background on the Case Avista provides electricity services to 220,000 customers and natural gas service to 134,000 customers in 10 Eastern Washington counties. In March, 2005 Avista filed a general rate increase case asking for $35.8 million increase for electric service and $2.9 million for gas service for a total of $39 million in revenue. Under Avista’s original proposal, the electric costs for an average residential customer would increase by 14.3% (almost $8 per month) and natural gas costs would increase by 2.1% ($1.50 per month). Commercial and industrial customers would see their monthly bills go up, for an average of 12.5% on the electric side and 1.8% in gas. Settlement Agreement In August, a proposed settlement was announced between Avista and the Washington Utilities and Transportation Commission (WUTC) staff. The Northwest Industrial Gas Users, an organization of large industrial gas users signed the settlement. The Energy Project, a non-profit organization that advocates for low-income households and which represents Spokane Neighborhood Action Programs, Rural Resources Community Action, North Columbia Community Action, and The Community Action Center of Whitman County, also signed the settlement. The Energy Project took no position on the rate increase aspects of the settlement, but concerned itself only with low-income assistance issues. If the settlement is approved, electricity rates for residents would climb an average of 8.9%, while gas rates would go up .68%. The average residential rates would go up about $5.22 per month for electricity and $.57 per month for gas. The proposed settlement cuts $13.7 million off of Avista’s original electric increase request. Most of the money - $9 million – results from a reduction in the company’s allowed rate of return on equity. Avista had proposed 11.5% rate of return but the settlement holds the rate of return to 10.4%. Under the proposal, Avista will provide an additional $200,000 for conservation programs. At present, Avista provides over $900,000 per year for these programs. Under the proposal, Avista would also provide an additional $600,000 per year for two years (subject to renewal) to assist low-income people with their power bills; at present Avista provides approximately $3 million per year for this funding. These programs have not received any additional funding in several years, but rates during the same period have increased more than 30% for electricity and more than 90% for gas. Thus, while the need for assistance has increased substantially, with more households needing more assistance, funding levels have remained the same. Higher bills mean program resources are distributed to fewer households. CUA believes that low-income program funding should be increased automatically when rates increase. Avista states it needs to raise rates because of the money it has spent beefing up generation and transmission systems, the purchase of a power plant in Oregon, and improvements made at its Cabinet Gorge Dam. Avista states it also has rising costs for gas, insurance, wages, and benefits. The WUTC can approve or reject the settlement agreement in its entirety, or approve it with conditions or modifications. Public Counsel and ICNU Oppose the Settlement However, the Public Counsel Section of the Washington State Attorney General’s Office, the state office whose duty is to advocate for residential utility customers and small business, and the Industrial Customers of Northwest Utilities (ICNU), an organization of large industrial electricity customers, object to the settlement. Public Counsel states: “Avista’s proposed rate increases would present a hardship for residents and small businesses in Eastern Washington, who have already seen their power rates go up steeply several times since 2000. Moreover, analysis by our experts shows that rate increases of the size proposed by Avista are not justified by operating expenses or necessary to allow the company to maintain a reasonable profit.” Public Counsel argues that residential electric rates should only go up 2.3% instead of the 8.9% increase allowed in the settlement. Public Counsel also states that gas rates should actually be reduced by .08% instead of the .68% proposed increase in the settlement. ICNU argues that Avista’s proposed return on common equity should be 9.8% instead of the above-average market return of 10.4% provided in the settlement agreement. Taken as a whole, the recommendations filed by Public Counsel and ICNU, if followed, would combine to eliminate the entire proposed rate increase.
More Information on this case is available at the WUTC website: www.wutc.wa.gov/050482 Note: Avista’s New Requested Gas Increase On September 12, 2005 Avista requested that the WUTC grant it a 23.5 percent ($38.6 million) increase to offset the higher cost of purchasing natural gas to serve its customers. Avista has asked that the filings become effective in both states on Nov. 1, 2005. This requested increase is not a part of the current rate increase described above and is not a topic of the scheduled public hearing, but is a purchased gas cost adjustments in which the increased price Avista is paying for gas is passed on to its customers with no increase in profits to Avista. Under the proposal an average residential customer would see an average increase of $16.39 per month, or about 23.5 percent. The total bill, including the increase, would be $86.04. Natural gas prices are 40 percent higher than prices of just a year ago. Avista’s filings do not include any of the price impact from Hurricane Katrina. Any lasting effects of Hurricane Katrina on natural gas prices would be reflected in future Avista price increase requests. |
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