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FOR IMMEDIATE RELEASE
October 17, 2007
Public Counsel objects to Avista’s proposed electric and gas rate increases

SEATTLE – The Public Counsel Section of the Washington State Attorney General’s Office today recommended the state Utilities and Transportation Commission (UTC) reject a request by the Avista Corp. to increase revenues by over $55 million for its electric and natural gas customers.

Public Counsel represents the public in utility rate cases. Chief Simon ffitch called Avista’s rate request excessive.

“Avista customers have seen frequent, substantial increases in their electric and gas bills over the last six years,” ffitch said. “Avista’s request would hit these customers hard with yet another rate hike that is substantially larger than the evidence supports.”

Spokane-based Avista serves 228,000 electric customers and 141,000 natural gas customers mostly living in Eastern Washington. Avista’s original request represented a 16.7 percent increase in electric rates and 2.3 percent increase in gas rates for residential and small business customers. This translates to an increase in the average household’s monthly electric bill of about $10 and natural gas bill of about $2.

Public Counsel filed expert witness testimony with the UTC that recommends Avista’s rate request be reduced by approximately $20 million. A portion of the testimony addressing energy efficiency and rate assistance programs for limited income customers was co-sponsored by the Energy Project, an advocacy group representing programs for limited-income customers.

Earlier this month, Public Counsel reached a partial settlement with Avista and other parties on some issues that, if approved, will reduce the rate request by $7.3 million. Notably, the settlement reduces the amount the Company is requesting to recover from customers for executive compensation by nearly $1.75 million. Avista also agreed to increase funding for programs to improve energy efficiency and provide assistance to low-income customers.

“We are very pleased with the results of the partial settlement,” ffitch said. “We are now focused on working to see that the remaining issues raised in our testimony are also resolved in a manner that protects the interests – and budgets – of residential and small business consumers.”

Of the issues that remain contested, Public Counsel opposes Avista’s request for an 11.3 percent return on shareholder profits, up from the current 10.4 percent level. ffitch said the request does not reflect current market conditions or take into account favorable regulatory mechanisms recently granted to Avista by the commission that reduce shareholder risk. Public Counsel recommends Avista not be allowed a return of more than 9.4 percent for electric operations and 9.35 percent for gas operations.

Public Counsel also opposes three other aspects of Avista’s filing. First, Public Counsel urges the commission to reject Avista’s request for authorization to file “mini rate cases” that could increase rates between general rate cases. Second, the testimony disputes the company’s proposal to charge customers a late-payment fee of 1 percent per month. Finally, Public Counsel questions the cost effectiveness of Avista’s plan to use automated meters, noting that this technology raises many cost and consumer protection concerns.

If the commission accepts the settlement and Public Counsel’s recommendations, Avista’s electric rate request, and corresponding impact on customer bills, would be reduced by more than 45 percent. The reduction to the company’s gas request would exceed 90 percent.

The UTC is expected to issue a decision by March 2008.

PUBLIC COMMENT:
Members of the public can comment on the proposed rate increases. Write to WUTC, P.O. Box 47250, Olympia, WA, 98504 or e-mail comments@utc.wa.gov. Include your name and mailing address, the name of the company (Avista), and docket no. UE-070804 (electric) and/or UG-070805 (natural gas).

For more information, customers may contact either the WUTC or Public Counsel:
• WUTC – (800) 562-6150, e-mail at comments@wutc.wa.gov. Information is available online at www.wutc.wa.gov. Enter UE-070804 (electric) and/or UG-070805 (natural gas) in the docket lookup field.
• Attorney General’s Office Public Counsel Section -- Public Counsel, Attorney General’s Office, 500 Fifth Ave, Suite 2000, Seattle, WA 98104-3188, or e-mail utility@atg.wa.gov

The Public Counsel Section advocates for the interests of consumers on major rate cases, mergers and other rulemakings before the UTC. Public Counsel also advocates for consumers in court appeals, through technical study groups and before the Legislature and other policy makers. The office maintains contact with the public through a citizen advisory committee, community organizations, public hearings and personal contact with consumers in major cases. More information about Public Counsel’s work is available online.

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Media Contacts: Kristin Alexander, Media Relations Manager - Seattle, (206) 464-6432
Simon ffitch, Public Counsel Section Chief, (206) 389-2055

Editor’s Note: The spelling of Simon ffitch is correct – the surname begins with two lowercase f’s.


 

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