Capital investments in infrastructure, technology, and systems maintenance are the main drivers behind Avista’s requests (Docket Nos. UE-150204 and UG-150205) filed earlier this month with the Washington Utilities and Transportation Commission to increase electric and natural gas base rates, the utility said.
Avista – which services nearly 340,000 electricity customers, and about 300,000 gas customers, in Washington State – submitted a proposal on February 9 for an 18-month rate plan, with new electric and gas rates to be phased in on January. 1, 2017, and on January 1, 2018.
Specifically, Avista’s requests, if approved, are designed to:
- Increase annual electric revenues by 7.6 percent, or $38.6 million; and annual natural gas revenues by 2.8 percent, or $4.4 million, on Jan. 1, 2017.
- Increase annual electric revenues by 3.9 percent, or $10.3 million; and natural gas revenues by 1.0 percent, or $0.9 million, on Jan. 1, 2018
Avista has proposed to offset the electric increase, for the January through June 2018 time frame, with Washington Electric Energy Recovery Mechanism (ERM) dollars. As a result, customers would not see an electric billing increase effective January 1, 2018; although the gas hike would still kick in.
On January 1, 2017, a residential electric customer using an average of 957 kilowatt hours (kWh) per month could expect to see a billed increase of $6.83, or 8.2 percent, for a revised monthly bill of $89.62. The revised monthly bill includes a proposed increase in the monthly basic charge from $8.50 to $9.50.
A residential natural gas customer using an average of 66 therms per month could expect to see a billed increase of:
- $2.13, or 3.5 percent, for a revised monthly bill of $63.50, beginning Jan. 1, 2017. This includes a proposed increase in the monthly basic charge from $9.00 to $9.50.
- $0.79 per month or 1.2 percent for a revised monthly bill of $64.29, beginning Jan. 1, 2018. There would be no change to the basic charge at that time.
The actual percentage increase for electric and natural gas customers would vary by customer class and depend on how much energy a customer uses.
The electric and natural gas requests for 2017 and 2018 are based on a proposed rate of return (ROR) on rate base of 7.64 percent, with a common equity ratio of 48.5 percent, and a 9.9 percent return on equity (ROE).
“We must continually invest in the facilities and systems we use to serve customers, including maintenance, replacements and upgrades, to meet their energy needs and expectations now and into the future. The costs of doing business and making these infrastructure investments continue to rise, and this is what is driving our general rate requests,” Avista CEO Scott Morris commented.
The 18-month proposal would change the cycle of base rate adjustments from winter to summer months. With this revision to the schedule, customers would be aware of any rate adjustments prior to entering the winter heating season. Future general rate cases would likely be filed in the summer months, with rate adjustments expected to occur the next summer. Under this plan, Avista would not file a rate case for new rates to be effective prior to July 1, 2018.