State regulators on Dec. 26 conditionally approved a multi-party settlement agreement that will allow Avista to raise electric and natural gas rates for the next two years for its Washington customers.
The Washington Utilities and Transportation Commission (WUTC) accepted a settlement that allows Avista to implement a rate increase for electric and natural gas customers over the next two years. New rates went into effecton Jan. 1.
Beginning in 2013, Avista will be allowed to collect an additional $13.6 million or 3 percent on average for electric customers. The increase will be offset by the return of $4.4 million currently in the “Energy Recovery Mechanism” (ERM) account, which is designed to recover, or refund to customers, changes in some power supply costs that are above or below the amount included in rates. As a result, customers will see a net increase of 2 percent in January.
For natural gas customers in 2013, Avista will be permitted to increase rates by $5.3 million, or 3.7 percent on average.
In addition, the commission will permit the utility to increase electric rates by $14.4 million in 2014 and natural gas rates by $1.4 million, which is about 3 percent on average for electric customers, and less than 1 percent on average for natural gas customers. However, the UTC modified the settlement to make the 2014 rate increase temporary, expiring on Jan. 1, 2015.
If ERM balances are sufficient, Avista will be required to return $9 million to electric customers to help lessen the impact of the rate increase.
Avista has agreed not to file for further rate increases to be effective before 2015. The commission will allow Avista the opportunity to earn a 7.64 percent rate of return, not the 8.25 percent the company originally requested.
“Avista claims that the two-step increases outlined in the settlement will provide its customers more certainty in their energy rates for the next two years,” in a statement released by WUTC commissioners. “Avista also contends that the two-step rate increases, combined with a “stay out” provision preventing the company from filing for new rates that would become effective prior to Jan. 1, 2015 will break the yearly cycle of general rate case filings.”
The average increase for residential electric customers in 2013 will be $20.28, or a monthly bill of $1.69. In 2014, the average increase for residential electric customers is $20.64, or a monthly bill increase of $1.72. These rates include a $2 increase in the monthly basic service charge.
The average increase for residential gas customers in 2013 will be $32.40, or $2.70 per month. Beginning Jan. 1, 2014, the typical customer’s monthly bill will rise by 57 cents. These rates include a $2 increase in the monthly basic service charge for all residential customers.
Avista or any of the other parties in the case, has 10 calendar days to file for reconsideration of the case with the UTC, or 30 calendar days to appeal the decision to Superior Court.
On April 2, Avista originally requested an increase in electric rates of $41 million, or 9 percent. The company also asked for more than $10 million, or 7 percent, in additional natural gas revenues. A multi-party settlement was filed Oct. 19.
Spokane-based Avista serves more than 237,000 electric and nearly 149,000 natural gas customers in Washington.