Increased capital investments in infrastructure, technology and system modernization are the major drivers in Avista’s request filed Monday with the Washington Utilities and Transportation Commission to increase electric and natural gas base rates.
Avista’s request, if approved, is designed to increase annual electric revenues by 6.7 percent or $33.2 million, and annual natural gas revenues by 6.9 percent or $12.0 million. Both requests are based on a proposed rate of return (ROR) on rate base of 7.46 percent with a common equity ratio of 48 percent and a 9.9 percent return on equity.
“Our general rate requests continue to be driven by the ongoing need to maintain, replace and invest in the facilities and equipment we use every day to serve our customers,” Avista Chairman, President and Chief Executive Officer Scott L. Morris said. “We are making investments to modernize our systems so we can meet our customers’ needs and continue to provide the safe, reliable energy our customers expect, now and well into the future. This includes ensuring our hydroelectric projects can continue to provide the low-cost energy they have for more than 100 years, systematically replacing aging infrastructure and investing in technology that will enhance reliability.
“We understand that rate increases can be challenging for our customers. While the costs of doing business continue to rise, we maintain a firm focus on managing our costs so that our customers can continue to have energy prices among the lowest in the country,” Morris added.
If Avista’s requests are approved, a residential customer using an average of 966 kilowatt hours per month could expect to see a billed increase of $6.45 per month, or 7.9 percent, for a revised monthly bill of $87.67. The revised monthly bill includes a proposed increase in the monthly basic charge from $8.50 to $14.
A residential natural gas customer using an average of 68 therms per month could expect to see a $5.41, or 7.9 percent billed increase for a revised monthly bill of $73.57. This includes the proposed increase in the monthly basic charge from $9.00 to $12.00.
The actual percentage increase for electric and natural gas customers will vary by customer class and will depend on how much energy a customer uses.
Avista serves more than 241,000 electric and nearly 152,000 natural gas customers in Washington. The last general rate request filing in Washington was Feb. 4, 2014. The UTC has up to 11 months to review Avista's request.
Current capital investments include upgrades and maintenance of generation facilities, transmission and distribution equipment, natural gas pipe and information technology upgrades. Costs to replace facilities and parts of our system are many times more expensive today than when originally installed. This is the primary reason for the need to increase rates.
Among the major capital investments in today’s filing are:
the ongoing and multi-year redevelopment of the 105-year-old Little Falls Powerhouse on the Spokane River to increase generation reliability and continuing rehabilitation of the 107-year-old Nine Mile Powerhouse on the Spokane River, including the replacement of original generators, turbines and other equipment which will increase the generation of clean, renewable power.
information technology upgrades that include the replacement of Avista’s 20-year-old legacy customer information system which supports traditional utility business functions, such as meter reading, customer billing, payment processing, credit, customer service orders and material management.
the ongoing project to systematically replace portions of natural gas distribution pipe, including hundreds of miles of natural gas distribution lines in Avista’s service area that were installed prior to 1987.
technology investments for deploying Advanced Metering Infrastructure in Washington, including installation of advanced meters, beginning in 2016. These meters allow for two-way communication between Avista and customers’ meters, and the technology creates the foundation for future customer benefits, including faster outage detection and restoration of service, plus near real-time energy use information and energy usage alerts. These capabilities will allow customers to better understand and manage their energy use.
Additional information about Avista’s rate request, including a video, is available at avistautilities.com/warates.