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Washington State Regulators Settle Cascade Gas Pipe Safety Issue, Deny Avista Rate Hikes

Washington state's regulatory commission took action on Thursday in separate cases involving a pipeline safety penalty for Cascade Natural Gas Corp. and general rate increase requests by Avista Utilities.

Regulatory safety staff at the Washington Utilities and Transportation Commission (UTC) filed a settlement agreement with Kennewick, WA-based Cascade in response to a complaint lodged earlier this year against the MDU Resources Group utility for violating state and federal pipeline safety regulations. And the UTC voted 2-1 to deny Spokane,WA-based Avista's separate gas and electric utility general rate increases.

The settlement was filed by UTC staff to impose a total penalty of $2.5 million, suspending $1.5 million on the condition that Cascade complete a comprehensive compliance program by agreed upon deadlines. Under the compliance program, Cascade must validate the maximum allowable operating pressure for all of its pipelines operating above 60 psig of pressure, focusing on high-risk pipelines.

Under the settlement, which still needs to be approved by the UTC, Cascade would be required to submit to third-party audit evaluating the company’s pipeline safety management program. The commission would then choose to accept, reject, or modify the agreement, a UTC spokesperson said.

In July, UTC filed a complaint against Cascade following a staff investigation that revealed the utility was unable to provide required documentation for nearly 40% of its high-pressure pipelines in Washington.

Regarding Avista's denial, a UTC spokesperson said that two of the three commissioners "rejected all aspects" of the combination utility’s proposal, filed last February to increase electric rates by 7.6% and natural gas rates by 2.8%. Commissioner Philip Jones dissented, saying Avista had made a case for increasing both gas and electric utility rates.

UTC Chairman David Danner and Commissioner Ann Rendahl said they found that the company failed to show that its current rates are not sufficient to meet its operating needs, denying Avista's request to increase gas rates by $4.4 million and electric rates by $38.6 million annually. UTC staff had recommended lower rate hikes.

The majority opinion concluded that Avista was proposing to maintain "a trajectory of rate increases that could continue on the same slope into the indefinite future" without providing "adequate evidentiary support to demonstrate that its current rates are insufficient or that the pace of its capital investments is outside of the company’s control.”

In the company’s 2015 rate proceeding, the commission determined that Avista did not demonstrate an immediate need to recover certain projected expenses, instead requesting that Avista provide more evidence to support those requests in a future proceeding.

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