This news release represents the decision made by the UTC in 2007. Avista filed a new rate case on March 4, 2008 requesting an increase in electric and natural gas prices. The UTC has until Feb. 2009 to make a decision.

Dec. 19, 2007
UE-070804, UG-070805, UE-070311

OLYMPIA, Wash. – State regulators today approved an agreement that reduces by 40 percent a proposed utility rate increase for Avista’s electric and natural gas customers in Washington.

In accepting the uncontested settlement agreement, the Washington Utilities and Transportation Commission (UTC) will allow the company to raise rates to collect $33.4 million in new electric and natural gas revenues, down from the original $55.6 million Avista requested in April. New rates go into effect Jan. 1, 2008.

Under the settlement agreement, the average residential electric customer using 1000 kilowatt-hours a month will pay an additional $6.39 a month for a total of $70.76. The typical natural gas customer using 70 therms a month will see their bill increase by about a $1 to $84.49.

“While approving increased rates in recognition of our obligation to ensure rates that are fair, just, reasonable and sufficient, we are mindful of the impact of any rate increase on customers – particularly those least able to afford it,” said the commissioners in their written decision.

The commission also approved a sizable boost of $236,000 in additional funding in energy programs benefiting Avista’s low-income customers. The company currently operates the program with about $2.2 million. In addition, funding for the low-income conservation program was increased from about $900,000 to just over $1.1 million.

The utility received an opportunity to earn a 10.2 percent rate of return on equity, slightly lower than the current 10.4 percent level.

Avista 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. The company also had made significant investments in its transmission system and upgraded some hydroelectric projects.

Avista filed the settlement agreement Nov. 5. Other parties to the settlement include the Public Counsel Section 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 that regulates 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.

Spokane-based Avista serves 228,000 electric customers and 141,000 natural gas customers mostly living in Eastern Washington.

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Editor’s note: A copy of the commission’s order is available at the UTC’s Web site: www.utc.wa.gov/070804