Pacific Power's rate hike shouldn't go any higher

The power company's appeal to boost the increase beyond 12 percent should be denied.


Pacific Power - a for-profit company - clearly faces financial challenges in delivering electricity to its customers. The company's costs are up as it must, for example, invest in new renewable energy such as wind power as has been mandated by several states.

Still, as we have said earlier, a double-digit rate increase is simply too much as the Pacific Northwest - and the entire country - as we attempt to recover from the Great Recession.

Yet, Pacific Power was granted by the state Utility and Transportation Commission a 12 percent rate increase - or about $135 more per year for the average customer. And Pacific Power will yield about $38 million more from the price hike that went into effect this month.

But Pacific Power officials contend the hike is not enough. Really? A 12 percent increase at a time when wages have been frozen (or reduced) and jobs have been lost is too low?

In its 37-page petition filed April 4, Pacific Power contends the rate increase approved was based on erroneous findings determined by UTC 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. Pacific Power maintains the commission's decision did not properly account for forecast growth rates and its analysis was based on contradictory economic conclusions.

Meanwhile, the UTC staff counters with an assertion that factors might have overestimated Pacific Power's costs. UTC staff is making the pitch the increase should be reduced.

Pacific Power had originally asked the UTC for a nearly 21 percent overall rate increase, which would have resulted in an additional $56.7 million for the company. That request was subsequently lowered to $48.5 million or almost 18 percent.

We continue to believe Pacific Power was shooting high in an effort to gain a double-digit rate hike and secure solid profits for its investors.

And while we grasp its approach, we don't believe it is right.

Electricity is a commodity that has become essential to our lives. It is for that reason its price is regulated by the government. The goal should be to ensure that all have reasonable access to power and are not gouged by providers of electricity.

Unfortunately, that's not necessarily what drives the UTC decision on what is an acceptable rate increase.

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

Consumers can't be forgotten. The UTC should not increase the rate hike beyond the 12 percent already approved.


Use the comment form below to begin a discussion about this content.

Sign in to comment

Click here to sign in