Staff members of the Utilities and Transportation Commission have reached a partial settlement with Avista on the company’s request to increase electric and natural gas rates for its customers in Washington.
The proposed settlement lays out an agreement that recovers in rates the remaining costs associated with Avista's partial ownership of the Colstrip coal-fired power plant in Montana, which by law must not serve Washington customers after 2025. It also sets aside funds for economic transition efforts in the Colstrip community and lowers the company's requested annual revenue increase from $58.7 million to $36.5 million.
Under the proposed settlement, the average residential electric customer using 918 kilowatts a month would see an increase of $5.41, for an average monthly bill of $87.63. The average residential natural gas customer using 66 therms a month would see an increase of $2.84, for an average monthly bill of $49.24.
The settlement resolves all contested issues in the company’s general rate case except for the company’s requested extension of its decoupling mechanism, a regulatory tool that allows utility revenues to be “decoupled” from sales.
Under the terms of the settlement agreement, Avista’s electric revenues would increase by $28.5 million, or 5.7 percent, and natural gas revenues would increase by $8 million, or 8.5 percent.
The three-member commission, which is not bound by the agreement, will make a final decision on the utility’s rate request next spring. New rates would go into effect April 2020.
The settlement includes a comprehensive accounting plan for Avista to recover costs of Colstrip Units 3 and 4 by 2025, about a decade sooner than previously planned. The 2019 Clean Energy Transformation Act requires companies to remove coal-fired resources from their energy mix by the end of 2025. The proposal facilitates the end of Avista’s use of coal power for electricity in Washington by that date.
The settlement agreement also sets aside $3 million for community transition efforts to mitigate the impacts of the eventual closure of the Colstrip power plant. The funds will be administered by Avista, in consultation with community leaders and stakeholders, to benefit local education, retraining, and energy assistance programs, among others.
In addition, the settlement includes a $650,000 increase to the company’s low-income weatherization funding and increases low-income rate assistance funding by at least 7 percent.
If the settlement is approved by the commission, Avista’s overall rate of return would be 7.21 percent, instead of the 7.52 percent the company requested.
In addition to the company and commission energy staff, the Alliance of Western Energy Consumers, the NW Energy Coalition, The Energy Project, and the Sierra Club also signed the settlement agreement. The Public Counsel Unit of the Washington Attorney General’s Office has signed on to all parts of the settlement except the proposed revenue increase for natural gas service.
The commission held a public comment hearing on the company’s request in Spokane in October. The agency has received 140 public comments to date on Avista’s rate proposal—139 opposed and one undecided.
Customers who want to comment on the company’s request or the proposed settlement can submit comments online at www.utc.wa.gov/comments; write to P.O. Box 47250, Olympia, WA, 98504; email firstname.lastname@example.org; or call toll-free 1-888-333-9882.
In April, Avista filed a general rate case with the commission requesting a two-year rate plan for its electric and gas customers. For the first year of the rate plan, the company requested $45.8 million in additional electric revenue and $12.9 million in additional gas revenue. For the second year, the company requested an additional increase of $18.9 million in electric revenues and $6.5 million in natural gas revenues.
The company last filed a rate case in 2017.
Spokane-based Avista serves more than 250,000 electric customers and nearly 164,000 natural gas customers in Eastern Washington.
The UTC is the state agency that regulates private, investor-owned electric and natural gas utilities in Washington. It is the commission’s responsibility to ensure regulated companies provide safe and reliable service to customers at reasonable rates, while allowing them the opportunity to earn a fair profit.