Avista Awaits UTC Approval of New Electric and Gas Rate in Washington

Avista, an energy company involved in the production, transmission and distribution of energy and other energy-related businesses, together with other parties in the company’s electric and natural gas rate case filings have reached a settlement agreement. The settlement agreement is designed to provide an additional $20.0 million or a 4.5 percent increase in annual electric billed revenue. This will also be equivalent to $3.75 million or a 2.6 percent increase in annual natural gas billed revenue.

The settlement agreement is still awaiting approval by the Washington Utilities and Transportation Commission (UTC). Also, the approval of the settlement agreement would conclude the general rate requests filed on May 16, 2011, with new rates becoming effective January 1, 2012.

If the UTC approves the settlement, a residential customer in Washington who is using an average of 977 kilowatt-hours of electricity per month would see a $3.02 or 3.9 percent for a revised monthly bill of $80.03. A residential customer who is using an average of 67 therms of natural gas a month would see a $1.76, or 2.8 percent for a revised monthly bill of $64.09.

“We believe the settlement agreement is a fair and reasonable outcome for our customers and for our shareholders,” says Dennis Vermillion, Avista Corp. senior vice president and president of Avista Utilities. “The agreement is the result of concessions and compromises on a number of issues to arrive at an outcome that is supported by the settling parties. It also represents continuing progress in our efforts to timely recover the costs of serving our customers.”

Recognizing the impact of rising prices on customers, especially limited income and senior customers, funding available under this settlement agreement for Avista’s Low Income Rate Assistance Program (LIRAP) would increase by $370,000. The increase in funding plus a reallocation of funds from the conservation education program would result in an additional $550,000 in direct energy bill-payment assistance for limited income and senior customers. In total, annual funding available for the LIRAP program would be approximately $3.6 million for electric customers and approximately $1.8 million for natural gas customers. The LIRAP program is funded through a separate tariff.

Avista‘s original request was filed with the UTC in May 2011 and included an electric rate increase of 8.7 percent or $38.3 million in increased annual electric revenues. The difference between the original request and the amount found in the settlement agreement is due to several factors. These include a decrease in natural gas costs to run the company’s thermal plants, removal of the Electric Energy Efficiency Load adjustment, a reduction in certain operating expenses and adjustments for administrative and general expenses.

The original request also included an increase in the common equity ratio and the return on equity. The specific capital structure ratios and the cost of capital components were not specified in the settlement agreement.

The UTC has up to 11 months to review and issue a decision in a general rate case request.