Avista seeks rate increase

Request includes 10.3 percent raise in electric, 8.3 percent hike in gas

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COEUR d'ALENE - Avista filed a request last month for permission to raise rates on electricity and natural gas to generate $31.8 million for infrastructure repairs.

The request includes a 10.3 percent increase in electricity rates over a two-year period and an 8.3 percent increase in natural gas rates.

If approved, Avista's request would increase monthly power bills for average residential electricity users by $5.92 a month in 2016, and another $6.10 a month in 2017. Average natural gas users would pay an additional $3.90 a month in 2016, and see another monthly increase of $1.79 in 2017.

"It's important to note that this is just a request or proposal," said Jessie Wuerst, a spokeswoman for Avista, as she explained the complexity of the request.

Avista is requesting the increase to offset some of its capital improvement costs associated with power production and the delivery of the power, according to Kelly Norwood, vice president of state and federal regulation.

Avista is currently spending $13.5 million to upgrade the Post Falls dam, and $67.3 million to upgrade the Nine-Mile dam. It has already spent another $107 million to update its customer information and billing system.

"It really is our core computer system," Norwood said. "It covers everything we do."

Norwood said Avista replaced the older computer system that was installed in 1991 and 1992.

"It was time to replace that," he said.

Wuerst said even though the Nine-Mile dam is in Washington, Idaho customers receive electricity from that hydropower project and share in the cost of its upgrade.

Norwood said Avista has just completed upgrades on its Clark Fork River dams, and is now focused on the Spokane River dams.

"Those dams are 100 years old," he said, adding much of the equipment inside the dams is 100 years old as well.

Even if the rate request is reduced or even denied by the Idaho Public Utilities Commission, Norwood said Avista is still going to do the upgrades.

"We are already in the middle of some of the work," he said, and other projects have already been completed.

Gene Fadness, policy strategist and public information officer for the Idaho Public Utilities Commission, said his agency is planning a public workshop in Coeur d'Alene soon to discuss the request and take public testimony.

Fadness said the customer feedback will help the staff, which is independent of the IPUC board, develop a recommendation to the board. The IPUC board will consider that recommendation and Avista's request to determine a fair, evidence-based rate increase or decrease depending on what it finds. The whole process takes six months.

"We have already received requests from customers asking the commission to deny Avista's application, but state statute requires that the commissioners first consider the evidence before they decide how much, if any, increase the company should be allowed," Fadness said. "We are in the process of gathering that evidence now."

Fadness explained that there are other rate components to consider as well. Some of those components can offset the increase in the base rate, which is what Avista is asking to increase.

Public utilities can also file annual Power Cost Adjustments requests to help them recover costs of purchasing electricity and gas, but also to refund money they saved when prices are lower than expected.

Fadness said in a press release earlier this month that the proposed increases in Avista's gas rates are anticipated to be offset by an estimated 10 percent reduction in natural gas rates through the annual Purchased Gas Cost Adjustment, which will be effective on Nov. 1. That could result in an actual reduction in the current gas rates Idahoans are paying.

Norwood gave an example of that. He said the natural gas prices have come down since Avista filed a similar rate increase proposal in Washington, so the requested increase has been reduced by the amount of savings the company is realizing now.

Just this week, the staff of the Washington Utilities and Transportation Commission and the attorney general's office recommended Avista lower its rates this year, but Norwood said much like Idaho, the WUTC's independent board will have the final say on the rate case in that state.

The IPUC staff and other parties will submit their pre-filed direct testimony in Avista's Idaho request on Oct. 21. Technical and public hearings will be in the latter part of November and the IPUC board is expected to rule on the increase by the end of the year.

Avista serves more than 127,000 electric customers and nearly 78,100 natural gas customers in Idaho.

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