Bellevue, WA-based Puget Sound Energy (PSE) late Friday asked Washington state regulators to cut its retail natural gas utility rates 12.5% overall and 16.4% for residential customers, effective June 1. Separately, the Puget Energy combination utility also asked the Washington Utilities and Transportation Commission (WUTC) to begin an 11-month review of what PSE called moderate general rate hikes collectively totaling $175.2 million for its gas and electric utility customers.

The now privately held utility said it is taking advantage of the current low wholesale natural gas prices by securing supplies for the rest of 2009 and storing increased supplies for next winter in what it said “captures benefits” for its retail customers.

PSE requested an overall $27.2 million, or 2.2%, increase in gas rates and a $148 million, or 7.4%, overall increase for electric utility charges. The utility is asking for the general rate increases to be effective April 1 next year. The utility added the caveat that none of the proposed increase is related to the $7.4 billion merger that closed last February, taking Puget Energy private with an investment consortium headed by a North American unit of the Australian firm, Macquarie (see Daily GPI, Feb. 9).

PSE said that if projected wholesale natural gas prices stay low, it hopes to file another purchased gas adjustment (PGA) request this summer to extend the cost reduction in October to cover next winter’s heating season rates.

“We are mindful of the difficulties our customers are facing during this challenging economic period — especially after the unusually cold winter and spring,” said PSE CEO Stephen Reynolds. “We are pleased to be able to bring our customers double-digit rate relief now and hopefully additional rate reductions before next winter and spring.”

In announcing the steep cutback in wholesale gas charges and proposed immediate reduction of the PGA, the utility also appeared sensitive to the amount of the general rate increase coming only a few months after taking the utility private with the Macquarie merger. PSE said it would have been filing for the general rate increases regardless of what ownership structure was in place.

For the natural gas generation rate hike, the bulk of the increase can be attributed to recovering 2008 expenditures for infrastructure investments to improve reliability and customer service, the Puget Energy utility said.

The electric revenue increase is supposed to recover costs PSE has incurred for purchasing new generation resources, including the $240 million Mint Farm Generating Facility acquired last December and an expansion of the utility’s Wild Horse wind generation facility. The rest is attributed to investments in electric system infrastructure and power supply costs, PSE said.

PSE said last year it invested $421 million to serve new customers and upgrade and improve the electric and natural gas infrastructure, and another $346 million on new energy supplies. These investments included building or upgrading 13 electric substations, installing 220 miles of natural gas pipeline, building 125 miles of transmission and distribution power lines, and replacing 800 electric utility poles.

Reynolds said the utility absorbed $21 million in delaying this general rate filing and it has recently frozen officer salaries and scrutinized more closely the timing of major projects.

As the WUTC reviews the rate hike request, PSE plans to continue to work “to identify additional opportunities to further reduce our request, including selling the excess renewable attributes of our wind facilities to maximize their economic benefits for our customers.”

In the meantime, Reynolds said PSE was fortunate, under its new ownership, to have all the equity capital it needs to take advantages of what he called “cost-saving opportunities in this down market” to make new investments and move ahead with key projects that should be economically beneficial to its western Washington state region.

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