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Puget Sound Energy electric customers to pay lower rates while natural gas rates increase slightly

Oct. 28, 2010
Docket Number: UE-101641, UG-101642, UE-101643, UE-101644, UE-070725 & UE-101581

Olympia, Wash. – Beginning Nov. 1, customers of Puget Sound Energy (PSE) will pay a little less for electricity and little more for natural gas due to separate actions taken by state regulators this week.

The Washington Utilities and Transportation Commission (UTC) approved PSE’s request to pass through natural gas costs that will result in a slight increase of nearly 2 percent, or about $1.50 for residential customers using 68 therms a month.

The commission took two additional actions that together will result in a small decrease in electricity rates for PSE customers over the next five months. The commission required that millions in proceeds from PSE’s sale of surplus renewable energy credits (RECs) to go back to electric customers. The UTC also required PSE to use the remaining portion of the REC proceeds to offset future rate requests.

In addition, the UTC authorized PSE to raise rates to offset a decrease in the federal power benefits passed through to PSE’s electric residential and small farm customers under the Bonneville Power Administration’s (BPA) Residential Exchange Program.

Taken together, the average residential customer using 1,000 kilowatt-hours of electricity a month will see his or her bill go down by 2.63 percent from November through March. A typical customer’s electric bill will decrease by $1.65, down from $99.68 to $98.03 a month. Changes in the Residential Exchange Program benefits are directly passed through in full to customers.

The UTC approved a multi-part proposal for allocating proceeds from the utility’s sale of excess RECs. PSE’s major sales of RECs began in 2009, and, to date, exceed $150 million.

RECs, also called green tags, are intangible assets that represent the right to claim the environmental attributes of a renewable generation project, such as a wind farm. RECs are issued for each megawatt-hour (MWh) of energy generated from environmentally clean or renewable resources, such as wind or solar power, or for each MWh of energy conserved through the installation of energy-efficiency measures.

RECs can in turn be traded and sold on the open market. Their prices can fluctuate, just like other commodities, and they are available for sale in numerous locations. A utility is required by state law to generate a certain percentage of its electrical output using renewable energy can meet its obligation by purchasing RECs.

The commission allowed the utility to use $3.3 million of REC sale proceeds as a credit against unrecovered California energy sales stemming from the 2001 energy crisis. It also authorized PSE to use $4.6 million for additional cost-effective low income energy efficiency projects during the current two-year program period ending next year. The remaining proceeds will flow back through to benefit ratepayers.

Natural gas companies are required to adjust rates periodically to reflect changes in wholesale prices. More than half of a PSE’s residential customer’s monthly bill is attributable to the cost of natural gas on which the company is not allowed to collect a profit.

Bellevue-based Puget Sound Energy serves more than 1 million electric customers and nearly 750,000 natural gas customers in parts of Snohomish, King, Pierce, Lewis, Thurston and Kittitas counties.

The three-member commission is the state agency in charge of regulating the private, investor-owned electric and natural gas 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.

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Staff contact: Marilyn Meehan
Posted/updated: 02/03/2011

 

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