Washington state regulatory staff filed an all-party settlement on Monday calling for regulators to approve a $4 million (1.6%) general rate increase for Kennewick, WA-based Cascade Natural Gas Co.
Staff members of the Utilities and Transportation Commission (UTC) filed an agreement modifying Cascade’s initial request to raise rates by $10.5 million (4.17%) and instead recommended the smaller amount. Cascade’s last general rate increase was in 2007.
The average residential customer would pay $1.39 more under the recommendation, for an average monthly bill of $55.86, a UTC spokesperson said.
The three-member UTC, which is not bound by the proposed settlement agreement, will make a final decision on the utility’s rate hike request this summer with new rates effective Sept. 1.
Under terms of the agreement filed last Friday, Cascade would be allowed the opportunity to earn a 7.35% overall rate of return, not the 7.65% the company originally requested. The settlement also requires that the company file its 2016 purchased gas adjustment by Aug. 1, so the rate adjustment for the wholesale cost of gas coincides with the proposed rates.
"The proposed settlement establishes a mechanism called ‘decoupling,’ under which utility profits are segregated from sales," a UTC spokesperson said. "Therefore, the utility’s recovery of fixed costs will not depend on the volume of its gas sales."
This approach removes the company’s financial disincentive to invest in conservation and energy efficiency that reduces sales volumes. Per the settlement, the residential basic service charge covering fixed costs will not change.
The settlement also includes provisions for conservation reporting, establishing low-income program goals, and compliance requirements to be completed before the next rate case.
Public comment hearings on the rate hike settlement have been scheduled for June 14 in Mt. Vernon, WA, and June 17 in Kennewick.
In addition to UTC staff and Cascade, other parties that signed the agreement include Northwest Industrial Gas Users, The Energy Project, and the Public Counsel Unit of Washington's Attorney General’s Office.