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Citing Capital Investments, Avista Seeks Rate Hikes

Spokane, WA-based Avista Utilities filed for 9.2% electric and 3.3% natural gas retail utility rate increases from the Washington Utilities and Transportation Commission (WUTC), it said Tuesday. Avista cited looming capital investments as the primary reason for the increase requests.

Citing hydroelectric relicensing, upgrading aging infrastructure and expanding natural gas storage, Avista has requested $36.6 million in added annual electric revenues and $6.6 million in added natural gas revenues. The utility said the increases are based on a proposed rate of return on rate base of 8.43% and a return on equity of 10.8%, with a debt to common equity ratio of 53.7% to 46.3%.

A typical residential electric utility customer faces a possible increase of $6.53/ month, and the typical residential gas user would see an increase of $2.84/month. Avista expects regulators to take up to their usual 11 months in processing the request. It is expected to be made effective next year.

About 70% of the utility's annual electric and natural gas revenues comes from its Washington state operations. It also operates in northern Idaho and parts of Oregon. Avista serves 231,000 electric and 144,000 gas customers in Washington state.

The rate proposal is an outgrowth of the company's multi-year energy resources plan, according to Avista CEO Scott Morris, who assumed the post Jan. 1. This plan is supposed to improve the utility's efficiency, reliability and capacity of aging infrastructure.

"The cost to keep pace with growing customer demand and maintaining our aging infrastructure is becoming increasingly expensive as the price of concrete, steel and other essential materials have increased exponentially in recent years," Morris said. "That's one reason Avista is focusing on gaining more energy from our current assets and on providing our customers with even more energy efficiency tools to manage their energy use."

The major capital investments cited by Avista include Noxon Rapids hydroelectric plant, various parts of 157 transmission and distribution substations and more than 14,000 miles of power lines; relicensing of five of six hydroelectric projects on the Spokane River totaling 105 MW; and expanding the storage and delivery capacity at the Jackson Prairie underground natural gas storage facility in southwest Washington.

"The ability to deliver more lower-priced natural gas lessens the need to purchase higher-priced spot gas in winter to meet customer demand, an important component in managing customer costs," Morris said.

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