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Avista January 1 Rate Increase Is Downsized in PUC Settlement

January 6, 2016 By Cheryl Kaften

The Idaho Public Utilities Commission (PUC) adopted a settlement (Final Order No. 3347) in the Avista Utilities electric and natural gas rate case on December 18 that represents a substantial reduction of the utility’ original request.

While the utility’s original filing asked for a two-step increase in electricity rates – of $5.92 per month in 2016 and $6.10 in 2017 – the commission granted Avista a lesser monthly boost of 75 cents for the homeowner using an average of 1,000 kilowatt-hours (kWh).

Similarly, while the utility requested an increase in natural gas bills of $3.90 per month in 2016 and $1.79 in 2017, the PUC approved only a hike of about $3.20 per month (including a $1 raise to the basic service charge) for customers using an average of 61 therms.

Overall, Avista had requested an increase in electric rates of 10.3 percent over two years and an increase in gas rates of about 6.7 percent over the same period. However, the settlement augments electric rates by an average .6 percent and natural gas rates by 3.5 percent effective January 1.

The settlement reduces Avista’s requested annual electric revenue increase from $13.2 million to $1.7 million. It reduces the requested natural gas annual revenue increase from $3.2 million to $2.5 million. Avista sought a 9.9 percent return on equity and was granted 9.5 percent.

In its initial application, the investor-owned utility claimed that its “existing rates are not fair, just, and reasonable, and that it must increase them so it can earn a fair return on its investment.”

Avista maintained that it “needs to increase its rates primarily to cover an increase in net plant investment (including return on investment, depreciation and taxes, and offset by the tax benefit of interest), and the December 31, 2016, expiration of an existing capacity sales agreement that will increase net power expenses.”

The commission staff found that the current settlement “will provide adequate recovery for the company without unreasonably burdening the utility’s customers.”

The parties also have agreed to a three-year fixed-cost adjustment (FCA) pilot for electric and natural gas operations. The FCA will compare actual FCA revenues to allow FCA revenues determined on a per-customer basis. Any differences will be deferred for a rebate or surcharge.

Parties to the settlement included the PUC staff, Avista, Clearwater Paper Corporation, Idaho Conservation League, Idaho Forest Group, Snake River Alliance; and the Community Action Partnership Association of Idaho, which advocates for customers on low- and fixed-incomes.

Petitions for reconsideration must be submitted to the PUC by no later than January 8.

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