State regulators fast track $51 million in refunds to keep Avista customer rates steady

Source: UTC, March 25, 2020

OLYMPIA, Wash. –The Washington Utilities and Transportation Commission today approved a rate increase for Avista Corporation electric and natural gas customers, but fast-tracked a number of customer refunds to hold rates down this year, when many customers are facing economic uncertainty due to the COVID-19 public health crisis.

As a result, Avista electric customers will see no rate increase this year. The average gas customer using 66 therms a month will see an increase of about $1.56 per month, less than half the amount authorized in the rate case.

Per a settlement agreement filed in November 2019, electric rates will increase by $28.5 million and natural gas rates will increase by $8 million, effective April 1.

However, the commission directed that $8.4 million in customer refunds from its recent remand decision be returned to electric and natural gas customers over one year.

Additionally, Avista will return approximately $42.4 million from the Energy Recovery Mechanism (ERM) bill rebate to customers over two years. This balance includes $3.3 million recently disallowed by the commission for the cost of replacement power during the unplanned outage at the Colstrip generating plant in Montana in 2018. The commission directed Avista to return a larger portion of the ERM money during the first year to achieve a net-zero impact to electric customers.

In its order, the commission noted that the state is under a Declaration of Emergency due to the outbreak of COVID-19. “Under these circumstances,” it said, “we find that rather than returning an equal portion of the ERM deferral balance over two years, which would result in a rate increase to electric customers during this difficult time, the better course of action is to return a greater portion of the ERM deferral balance in the first year to achieve a net zero revenue requirement impact beginning April 1, 2020.

While gas customers will still see an increase, the order authorizes an additional 7% for the existing low-income bill assistance program for residential customers.

The commission determined the rate increases were necessary in part to allow Avista to recover costs associated with its accelerated transition away from the coal-fired Colstrip plant. The 2019 Clean Energy Transformation Act requires Washington utilities to remove coal-fired power from their energy mix by the end of 2025.

Additionally, the settlement sets aside $3 million for community transition efforts to mitigate the impacts of the eventual closure of the Colstrip power plant, half funded by ratepayers and half funded by company shareholders. The settlement also includes a $650,000 increase to the company’s low-income weatherization funding.

The order also allows Avista’s decoupling mechanism to continue until March 31, 2025. Decoupling is a regulatory tool that allows utility revenues to be “decoupled” from sales to encourage energy conservation.

During the public comment period, the commission received 146 public comments about the proposed rate increases, 141 opposed and five undecided.

Avista last filed a rate case in 2017.

Spokane-based Avista serves more than 250,000 electric customers and nearly 164,000 natural gas customers in Eastern Washington.   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.