Citing increasing infrastructure, environmental and legal costs, Spokane, WA-based Avista Utilities last Friday filed for retail natural gas and electric rate increases collectively totaling about $109 million in Washington state and Idaho. The utility seeks to have increases in Idaho effective by late August, and the rate hikes in Washington effective at the end of this year.
The Idaho Public Utilities Commission (PUC) has a seven-month processing procedure for rate increase requests; and the Washington Utilities and Transportation Commission (WUTC) uses an 11-month process. Other rate changes expected later in the year in both states include annual purchased gas adjustments typically filed each September, and an expected settlement with the Bonneville Power Administration (BPA) on its residential exchange program that would result in electric rate credits for Avista’s residential and small farm customers.
Included in the PUC and WUTC filings are costs for generating and purchasing power, and those costs have increased during the last year due in part to what Avista called “the need to replace expiring low-cost power contracts,” and the continuing need to acquire new resources to serve growing customer demand.
Avista said a combination of customer growth and aging infrastructure requires the utility to continue investing about $200 million annually in system upgrades to ensure ongoing safe and reliable energy deliveries. Some of the Avista infrastructure is now more than 70 years old.
“The requested natural gas increase in both states is driven primarily by increased operating costs and upgrades in the distribution system that delivers gas directly to customers,” an Avista spokesperson said.
In Washington state, Avista is requesting a net electric rate increase of $69.8 million, or 8.6%, and a retail gas hike of $4.9 million, or 2.4%. The electric rate request is much higher, about 16%, but it was driven down by an offsetting 7.4% decrease in the energy recovery mechanism surcharge tied to fuel costs and purchased power. As part of the increase request, Avista seeks an 11% return on equity (ROE).
In Idaho, Avista asked the PUC for a net electric rate increase of $31.2 million, or 7.8%, and a natural gas hike of $2.7 million, or 3%. This request overall for electric retail rates was a 12.8% rate hike that was offset by a 5% reduction in the current power cost adjustment (PGA). Similar to Washington state, the utility seeks an 11% ROE.
Avista serves 231,000 electric and 144,000 natural gas utility customers in Washington, and 121,000 electric and 93,000 gas customers in Idaho.
“We are continuing to aggressively manage our costs, while at the same time ensuring that we meet growing customer demand with energy that is reliable and brings with it a high level of customer satisfaction,” said Avista CEO Scott Morris. “We continue to work toward a resolution with BPA on the residential exchange program that would restore to Avista customers their fair share of benefits from the federal hydroelectric system.”
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