Avista Corp.’s plans to fully recover costs it has been deferring since the summer of 2000, without having to saddle its retail customers with a price increase, were bolstered recently after the company reached a settlement agreement with several parties, including the staff of the Washington Utilities and Transportation Commission (WUTC).

The agreement, which was unveiled yesterday, calls for an extension of the Washington State deferral accounting mechanism through February 2003. That date coincides with Avista’s power cost deferral and recovery plan. In 2002, the company expects to be in a surplus power position, with the benefits of surplus power sales expected to offset the power costs that the company has been deferring since July 2000. Avista expects to reduce the power cost deferral balance to zero by the end of February 2003. The current deferral mechanism allows the company’s Avista Utilities affiliate to defer certain electric power costs incurred to serve customer loads.

If Avista is successful in carrying out its plan, it will fully recover its deferred costs without having to implement a price increase for its retail customers. But the company warned that its ability to fully offset the deferred costs is based on a number of assumptions including, but not limited to: stream flow conditions, thermal plant performance, level of retail loads and wholesale market prices during the deferral period.

“The collaborative settlement agreement is positive for our customers, our company and our state,” said Gary Ely, Avista’s CEO. “We’ve worked extremely hard to shield our customers from the substantial electric rate increases that others throughout the region are experiencing,” he added.

Avista and the staff of the WUTC were joined in the settlement agreement by the public counsel section of the Washington Attorney General’s Office and the Industrial Customers of Northwest Utilities. The parties, representing all participants in the proceeding, have asked the WUTC to approve the settlement on or before May 25.

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