SEATTLE – The Public Counsel Section of the Attorney General’s Office announced today that is has joined in an all-party settlement of Avista Corp’s pending utility rate case. Avista has proposed to increase its revenues by raising the amount it charges customers for electricity and natural gas.
“While any rate increase is difficult for consumers, this settlement significantly reduces the size of the increase,” Public Counsel Section Chief Simon ffitch said. “Avista did make the case that some level of increase was warranted for plant investments, power supply and transmission expenses, all of which help the company serve customers.”
Other parties to the settlement are the staff of the Utilities and Transportation Commission, industrial gas and electric customers and the Energy Project, an advocacy group representing limited-income customers.
Avista originally requested a $55 million increase in additional revenues, which would have meant a 16.7 percent increase in electric bills and 2.3 percent increase in gas rates for residential and small business customers.
If approved by the UTC, the settlement would allow Avista to increase annual electric rates by $30.2 million (an average of 9.4 percent) and gas rates by $3.3 million (1.7 percent). The average electric customer who uses 1000 kwh per month would see bills rise by about $6. The new rates would take effect Jan. 1, 2008.
The settlement also reduces Avista’s return on equity (shareholder profit margin) from its previously authorized level of 10.4 percent to 10.2 percent. Avista had sought an increase to 11.3 percent.
In addition, Avista agreed to withdraw other proposals that Public Counsel had opposed in testimony filed on Oct. 17, including (1) a request for “mini-rate cases” that would have allowed rate increases between major rate cases, and (2) permission to begin imposing late payment charges on customer bills. The settlement also clarifies that Avista will have to demonstrate that deploying automated meters in its Washington service territory is prudent and cost-effective.
Earlier this month, Public Counsel reached a partial settlement with Avista and other parties. That agreement reduced the amount the company sought to recover from customers for executive compensation by nearly $1.75 million. It also increased funding for low-income assistance and energy efficiency programs.
“These two settlement result in significant benefits for consumers,” ffitch said, “by reducing the magnitude of the rate increase and helping to avoid potential future rate hikes. The lower return on equity is fair because it’s consistent with market trends and with Avista’s reduced level of risk.”
The UTC is expected to hold a hearing on these settlements in mid-November.
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 at /utilities-regulated.
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Media Contacts: Simon ffitch, Public Counsel Section Chief, (206) 389-2055
Kristin Alexander, Media Relations Manager - Seattle, (206) 464-6432
Editor’s Note: The spelling of Simon ffitch is correct – the surname begins with two lowercase f’s.