State approves Puget Sound Energy’s request to raise rates to cover power-supply costs
 
Aug. 2, 2007
UE-070565

Olympia, Wash. – State regulators today approved a settlement agreement that allows Puget Sound Energy (PSE) to recover money spent on higher power-supply costs.

In accepting the uncontested agreement, the Washington Utilities and Transportation Commission (UTC) authorized the company to increase electric rates by about 3.7 percent on average beginning Sept.1.

PSE estimates an average residential customer using 1,000 kilowatt-hours will see his or her electric bill rise 3.68 percent, or $3.24 a month, to about $91.31. The utility’s revenues will increase by $64.6 million a year. Natural-gas rates are not affected.

PSE sought the rate hike to pay for rising costs in the wholesale price of natural gas used to generate some of the electricity it supplies to customers, and to pay for a 277-megawatt gas-turbine plant at Goldendale in Klickitat County. PSE acquired the Goldendale plant this year for $120 million after Calpine Corporation, which built the plant for an estimated $334 million in 2004, declared bankruptcy. A federal bankruptcy court approved the sale in February. The commission determined the utility’s purchase of the Goldendale plant was prudent.

The company filed its request March 20 under a five-year-old provision called a Power Cost Only Rate Case (PCORC), which allows PSE to file periodically for adjustments to electricity rates based solely on changes in power-supply and fuel costs necessary to meet customer demand. The PCORC does not consider the company’s other costs, such as operating and maintenance, salaries, equipment and taxes, which are addressed in more comprehensive rate cases.

PSE filed the settlement agreement July 5. Other parties to the settlement include the Public Counsel Division of the state Attorney General’s Office, the Industrial Customers of Northwest Utilities, and the commission staff, who operate independently of the commissioners in litigated rate cases.

The UTC is the state agency in charge of regulating private, investor-owned electric 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.

Bellevue-based Puget Sound Energy provides electricity service to more than 1 million customers living in nine Washington counties: King, Pierce, Jefferson, Island, Kitsap, Kittitas, Skagit, Whatcom and Thurston.