The Idaho Public Utilities Commission on Jan. 3 said that electric rates for the northern Idaho customers of Avista Utilities went up by an average 2.6% effective Jan. 1, and that while the utility had sought a 6.3% increase, a settlement proposed by commission staff, Avista, and other parties resulted in the smaller increase.
The company had requested a $15.4m increase to its annual revenue requirement, and the settlement, which the commission adopted, reduced that increase to $6.25m, the commission said. Parties signing the settlement included commission staff, Clearwater Paper Corporation, Idaho Forest Products, the Snake River Alliance, and the Community Action Partnership Association of Idaho, which represents low- and fixed-income customers, the commission said.
Avista, in a Dec. 28, 2016, statement, said that a residential customer using an average of 918 kWh per month can expect to see a bill increase of $2.64 per month, or 3.1%, for a revised monthly bill of $87.15. The total revised average monthly bill amount includes the effects of an increase in the basic charge of 50 cents, from $5.25 to $5.75 per month, the company said.
"The commission’s decision provides new electric rates in Idaho that are reasonable for our customers, the company and our shareholders," Dennis Vermillion, Avista Corp., (NYSE:AVA) senior vice president and president of Avista Utilities, said in the statement. "This outcome provides us the opportunity to continue to earn a fair return in Idaho and supports Avista’s efforts to make key capital investments so we can continue to provide the reliable energy our customers expect."
The commission said in its statement that the most significant adjustment to Avista’s rate request was a $4.5m reduction by moving the net expenses for the Palouse Wind project from base rates to the annual power cost adjustment (PCA) process.
“Circumstances and evidence suggest that the company acquired Palouse Wind to meet resource portfolio standards for the State of Washington, not to meet Idaho load needs,” the commission said, noting that while Avista pays substantially more for Palouse Wind energy than the actual market value of the energy, Idaho customers are served by some of the energy from the wind project.
The compromise in past years has been to remove the above-market value of Palouse energy from base rates and flow 90% of the remainder through the PCA process, with Avista paying the remaining 10%, the commission said. By continuing that treatment for Palouse Wind, the savings to customers is about $450,000 annually, the commission said.
The settlement also reduced Avista’s requested return on equity from 9.9% to 9.5%, resulting in a $2.47m reduction in revenue requirement, the commission said, adding that other reductions included $1.33m from capital plant additions; $1.06m from 2015 storm costs; $333,000 from administrative and general expense, board of director expense and other items; $310,000 from non-union labor expense; and $171,000 by removing all company officer incentives.
The commission also noted that the settlement reduced the size of the increase in the residential basic charge from the company’s requested $6.25 per month to $5.75 per month; the former charge was $5.25 per month.