IPUC adopts settlement of Avista rate caset

COEUR d’ALENE — The Idaho Public Utilities Commission has adopted a settlement to the Avista Utilities electric and gas rate cases that increase electric rates an average 9.25 percent over three years and gas rates an average 2.6 percent over two years.

The first-year electric increase is 3.59 percent and the first-year gas increase is 1.9 percent, both effective Oct. 1.

The settlement “represents a reasonable compromise to the positions and we find it in the public interest,” the commission said in its order issued Tuesday. “In particular, we note the stipulation and settlement represents a significant reduction in the request revenue increase.” 

The first-year increase in electric rates contained in the stipulation and settlement is 3.59 percent rather than the 14 percent originally proposed by Avista, the commission said.

The commission said it recognized “that initial disputes among the parties were numerous and significant. This case has generated many customer comments opposed to the rate increases originally requested by the company.”

Avista originally requested a $32.1 million increase in annual electric revenue and a $2.6 million increase in annual gas revenue. The settlement approved by the commission gives the company $21.2 million spread over three years in electric revenue and $1.85 million spread over two years in gas revenue. Helping to offset the increase was a $17.5 million deferred state income tax benefit.

“We appreciate the effort of the parties and commission in arriving at a settlement that recognizes the interest of all parties, including Avista and its customers,” wrote Debbie Simock, Avista communications manager. “We’ll continue our focus on reducing costs and gaining efficiencies wherever possible without compromising safety or reliability, which we take very seriously.”

The three-year phased rate increase effective dates are as follows:

• Oct. 1, 2010 — 3.6 percent electric and 1.9 percent gas.

• Oct. 1, 2011 — 3.9 percent electric and 0.72 percent gas.

• Oct. 1, 2012 — 1.74 percent electric and 0 percent gas.

For a residential customer who uses the average residential consumption of 1,000 kWhs per month, the rate effective Oct. 1 would increase a bill by about $3.50 per month from $80.90 to $84.40. If the one-year PCA is approved, an average residential bill would increase by another $1.88 per month. The customer service charge for electric customers increases from $4.60 to $5 per month. The gas customer service charge of $4 per month does not increase. Avista originally requested an increase to $6.75 per month for both customer service charges.

The adopted settlement ends a case that began last March.

The commission said it is well aware of the impact of rate increases in today’s economy, particularly on customers with low and fixed incomes.

“We do agree with those comments that Avista needs to ‘tighten its belt’ to reduce costs and improve its efficiencies,” the commission said.

When Avista filed the rate case in March, it said the increases are necessary because of escalating power supply costs, increased costs to meet new federal requirements that ensure reliability, and the need to replace aging infrastructure.

Power supply contracts that provide Avista customers with about 100 average megawatts, about 10 percent of the company’s entire retail load, expire at the end of this year. The power provided by these contracts is about 3 cents per kilowatt-hour, which is well below the cost to replace that power.

Interested parties may petition the commission for reconsideration by no later than Oct. 12.

Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to (208) 334-3762.