Avista Files 2019 Rate Case, Continuing Pattern of Overlapping Rate Cases
Posted on March 26, 2019 by Will Gehrke
Tags, Energy
Avista, which provides natural gas service in parts of southern, central, and eastern Oregon, recently filed a general rate case. If Avista’s rate case is accepted as filed, the average residential bill would increase by 8 percent. In Oregon, Avista serves the cities of Medford, Klamath Falls, Roseburg, Ashland, Grants Pass, and La Grande. Avista has filed a rate case in five of the past six years. The one exception was 2018, when Avista attempted to merge with Ontario utility Hydro One.
Avista’s pattern of numerous overlapping and concurrent rate cases is unusual in Oregon. After rates are established in a rate case, it is typically assumed that the utility will manage costs for a period of time. Once the utility is unable to manage costs, it files another rate case to receive rate relief. Avista’s numerous and successive rate cases suggest that the company is using rate cases as a cost recovery mechanism. This is a departure from traditional regulatory principles.
Avista has stated that the reason for filing this rate case is to receive rate relief in order to facilitate the overall systematic replacement of aging infrastructure. 92 percent of the increase in rates is related to capital investment, which the company believes is necessary to maintain safe, reliable service to its natural gas customers. A significant portion of the rate increase is due to Avista’s request to increase its profit margin. Avista has asked the Oregon Public Utility Commission to increase its return on equity (ROE) from 9.5 percent to 9.9 percent. CUB believes that the ROE proposed by Avista would be a boon to its shareholders, to the detriment of customers. CUB will examine the company’s ROE testimony to determine whether Avista’s targeted profit margin is overly generous.
Because it is still early in the process, CUB is not convinced that raising Avista’s residential customer rates is justified at this time. CUB will spend the next several months analyzing this rate case and asking discovery questions before writing testimony before the Commission. Stay tuned to our blog for more information as this case develops.
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03/25/19 | 0 Comments | Avista Files 2019 Rate Case, Continuing Pattern of Overlapping Rate Cases