CUB Settles Avista Rate Case
Posted on February 4, 2015 by Bob Jenks
Tags, Energy
CUB is working on many fronts this winter to minimize or avoid major rate increases across the state, and in the case of one utility company, we have good news to share. Working side by side with the staff of the Public Utility Commission (PUC) and a group of industrial customers, CUB has reached a settlement in the Avista rate case.
Avista is a natural gas utility serving parts of southern and eastern Oregon. Avista had requested a $9 million rate increase, which would have raised residential rates by 9.8%. The settlement CUB achieved reduces the increase in revenue to $5 million, which equates to a residential rate increase of 5.3%.
In addition, Avista had proposed raising the monthly fixed charge from $8 to $10, but agreed to keep it where it is today. This was an important victory. CUB generally opposes increases to the fixed charge component of the bill. For natural gas customers who use gas only for winter heating, an increase in the fixed charge increases the size of the bill in months when no natural gas is actually purchased from the utility. This creates an incentive for customers to disconnect in the summer, which in turn causes gas utilities to seek higher reconnection charges to penalize customers for disconnecting their service.
While CUB is concerned about the effects of this increase, especially as it comes on top of an increase in Avista’s natural gas costs, the increase is caused by capital investments that the company made in replacing aging pipes and in acquiring a new billing system. Under the utility regulatory system, Avista is allowed to recover these costs. CUB and the PUC staff put a lot of work into examining the company’s capital investments to verify the level of investment that would actually be benefiting customers when these rates go into effect later this year. The PUC rejected several items from which Avista wanted to recover costs because they were not expected to be “used and useful” to customers this year.
In addition, we were able to get the company’s profit margin significantly reduced, and we rejected their proposal to earn a profit on the money they set aside for their employees’ pensions.
Here at CUB, we certainly are not a fan of utility rate hikes. But sometimes they are necessary. However, it is critical that rate requests are well scrutinized, so customers can be protected from improper charges. We scrutinized Avista’s case to get the best possible deal for ratepayers, and we are committed to doing the same with rate cases opening soon with Cascade Natural Gas, PGE, and potentially Pacific Power. Stay tuned to our blog for updates on those cases over the next few months!
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04/27/17 | 0 Comments | CUB Settles Avista Rate Case