Regulatory staff takes dim view Pacific Power rate hike

Pacific Power wants a 21 percent increase, but Utilities and Transportation Commission staff suggest a smaller increase.

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Pacific Power's request for a 21 percent rate increase next spring received the cold shoulder from state regulatory staff members.

But customers of the Portland-based utility would still see a double-digit percent increase under a recommendation from staff members at the Washington Utilities and Transportation Commission.

In testimony filed Tuesday, UTC staff recommended Pacific Power be allowed to raise its rates by 12 percent -- a little more than half the original request -- starting in April.

The three-member Utilities and Transportation Commission is not bound by the recommendation. The commission will make a final decision next spring, according to an announcement Tuesday.

Pacific Power, which serves about 130,000 customers in Kittitas, Columbia, Garfield, Walla Walla and Yakima counties, requested a rate increase last May. The 21 percent increase would generate an additional $57 million in revenue for the company. That represents an 8.34 percent overall rate of return. The monthly bill for the average residential customer using about 1,300 kilowatt hours per month would rise $19.75 to $112.86. That proposal also includes a 50 percent jump in the basic customer service charge from $6 to $9 a month.

Pacific Power officials have said the rate hike would offset rising costs of power anticipated from the expiration of several long-term contracts. Agreements with Bonneville Power Administration and a natural-gas fired plant in Hermiston, among others -- are set to expire. Those must be replaced at the new market rates.

Under the staff proposal filed this week, the company would be allowed to generate another $33 million for a 7.48 percent overall rate of return. The bill for the average residential Pacific Power customer would rise by $13.10 to $103.34. The basic monthly service charge would increase from $6 to $7.50 and paid by everyone regardless of the amount of energy used. Additional a nine-cent-a-month increase for customers would go to the company's low-income bill assistance program. The UTC staff recommendation of 55 cents a month would allow an additional 245 people to be served.

The scaled down recommended rate hike still represents the largest increase for customers in recent history. Last January, customers saw a 5.3 percent increase. In 2009 rates were raised by 8.5 percent. The year before that customers saw a 6.5 percent increase in their bills.

The potential rate increase has at least one Walla Walla County business concerned about its future here. Boise Inc. officials said if Pacific Power gets the 21 percent it seeks, the Wallula mill will see a $4.5 million jump in its annual electric costs.

"It's not something we can absorb lightly," said Nick Nachbar, manager of the kraft pulp and paper mill that counts electricity as one of its three largest costs.

In addition to the UTC staff and the company, other parties that will take part in the rate increase proceeding include the Attorney General's Public Counsel Section, advocates for large electricity users and low-income customers, Wal-Mart and Sam's Club stores.

Vicki Hillhouse can be reached at vickihillhouse@wwub.com or 526-8321.

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