Pacific Power's proposed rate increase of 21 percent was nearly cut in half earlier this month by the Washington Utility and Transportation Commission staff. The UTC staff recommended Pacific Power be allowed to raise its rates by 12 percent.
That is still too high. A double-digit increase in power rates would be a crushing blow to industry, and it would be painful to private citizens. Raising rates 12 percent is out of line in the midst of a deep recession.
We understand that Pacific Power, like most private companies, is feeling the pinch of a lousy economy. And we get the power industry in particular has a lot of capital expenses it must make to keep the electricity coming.
Pacific Power officials acknowledged the timing is bad for what was then a 21 percent increase. They claimed it was necessary because it has to make investments to satisfy state and local mandates for more renewable power and pollution controls.
"We understand the timing is horrible with so many facing ongoing economic distress, but these are good long-term investments that we're making on behalf of our customers," Jan Mitchell, a company spokeswoman, told The Oregonian.
In addition, the company has to upgrade the transmission lines. The overall capital investment exceeds $2 billion across its six-state system, The Oregonian reported.
Given that, we would concede some rate increase is reasonable. We see nothing reasonable about a 21 percent hike or even a 12 percent jump.
The 21 percent rate might have been enough to shut down the Boise Paper mill in Wallula and drive those jobs overseas. A 21 percent power rate increase would have added $4.5 million to the company's annual power bill.
An increase of half that will be difficult to absorb, particularly with the sluggish economy.
The pain will be just as great on a smaller scale for families if power rates go up double digits. A lot of folks haven't received pay raises the last few years and a huge rate hike will stretch thin budgets even thinner.
Tonight the UTC is holding a hearing in Yakima to take public comment on the proposed rate increase. But the UTC will continue to take public comment through Jan. 18. Pacific Power customers can write the UTC at P.O. Box 47250, Olympia, WA. 98504 or e-mail comments to firstname.lastname@example.org or call toll-free 1-888-333-9882.
The UTC must take this public comment and juxtapose it with Pacific Power's current revenue and costs, including its capital outlay.
We believe only a modest rate hike is justified -- and acceptable -- as the region continues to endure the Great Recession. We don't have a specific number, but it should be a single digit increase.