Electric rates may get second look

The state Utilities and Transportation Commission is being asked by two parties to reconsider a Pacific Power rate increase.

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WALLA WALLA -- Don't get too comfortable with those new electricity rates just yet.

The Washington state Utilities and Transportation Commission is being asked to consider whether the rate increase that took effect with Pacific Power customers earlier this month was too low. Or, conversely, too high.

The electric provider and commission staff have filed separate petitions asking the commission for reconsideration.

Both sides argue the increase granted by the three-member commission and effective April 3 was made erroneously. If Pacific Power's argument is accepted, it would likely result in a higher rate for the 130,000 customers served by the utility, including in Walla Walla. If the argument from Utilities and Transportation staff is accepted, the result would likely be a decrease.

Both parties have been given an opportunity to respond to each other's petitions via written correspondence by Thursday. After that, Commissioners Jeff Goltz, Patrick Oshie and Philip Jones will consider the arguments and evidence. A decision could come within a couple of weeks, officials said.

Though UTC staff make recommendations on proposed rate adjustments, the commission is a separate decision-making body. Each commissioner for the quasi-judicial and quasi-legislative state agency is appointed by the governor and confirmed by the Senate for a six-year term.

The process for determining increases in revenue and rates for utility companies is based on complex calculations that take into account operating expenses, rate of return on investment and numerous other details.

In its 37-page petition filed April 4, Pacific Power said the rate increase approved by the commission was based, in part, on erroneous findings determined by commission staff members. The rate of return for Pacific Power, the petition states, was based on analysis that failed to consider market conditions now and the period when the return on equity was last determined. The utility company also maintains the commission's decision did not properly account for forecast growth rates and its analysis was based on contradictory economic conclusions.

"What we're looking for is reconsideration and clarification on a few issues," said Pacific Power spokeswoman Jan Mitchell. "We're asking the commission to take another look."

Mitchell said adjustments in the final order approved by the UTC took the increase down to about 10 1/2 percent -- not the 12 percent initially reported. She said Pacific Power had no further comment beyond that.

UTC staff argue in their petition that an incorrect equity ratio was used in the ratemaking capital structure that resulted in the decision late March. The decision excluded Pacific Power's short-term debt, said Tom Schooley, accounting manager for the UTC's energy division.

"We're asking for reconsideration to make sure that the commission really is accepting the capital structure that it wanted for the right reasons," he said.

Pacific Power's residential customers experienced a roughly $11.26 jump in their monthly bills earlier this month. The average residential customer using 1,300 kilowatt-hours per month will pay $105.30 under the increase approved by the UTC.

That increase was about two-thirds of Pacific Power's original request when the subject was broached last May with the regulatory commission. Power company officials said higher rates were needed to pay for new power and gas-supply contracts. The increase was also driven by increased power costs, additional transmission and distribution facilities and a natural gas plant in Chehalis deferred from the last rate case. The new rates add up to approximately $38 million more a year for Pacific Power. The UTC said the rates will be offset by a customer credit of $4.8 million, which reflect the electric provider's revenue from the sale of renewable energy credits from its wind facilities.

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