Avista Reaches Multi-Party Settlement in Washington Electric and Natural Gas Rate Requests
September 30 2011 - 7:05PM
Marketwired
Avista (NYSE: AVA) and other parties in the company's electric and
natural gas rate case filings have reached a settlement agreement
that, if approved by the Washington Utilities and Transportation
Commission (UTC), is designed to provide an additional $20.0
million, or a 4.5 percent, increase in annual electric billed
revenue, and $3.75 million, or a 2.6 percent increase, in annual
natural gas billed revenue. Approval of the settlement agreement
would conclude the general rate requests filed on May 16, 2011,
with new rates becoming effective January 1, 2012.
If the settlement is approved by the UTC, a residential customer
in Washington using an average of 977 kilowatt-hours of electricity
per month would see a $3.02, or 3.9 percent, per month increase for
a revised monthly bill of $80.03. A residential customer using an
average of 67 therms of natural gas a month would see a $1.76, or
2.8 percent, increase per month for a revised monthly bill of
$64.09.
"We believe the settlement agreement is a fair and reasonable
outcome for our customers and for our shareholders," said Dennis
Vermillion, Avista Corp. senior vice president and president of
Avista Utilities. "The agreement is the result of concessions and
compromises on a number of issues to arrive at an outcome that is
supported by the settling parties. It also represents continuing
progress in our efforts to timely recover the costs of serving our
customers."
Avista's original request filed with the UTC in May 2011
included an electric rate increase of 8.7 percent, or $38.3
million, in increased annual electric revenues. The difference
between the original request and the amount in the settlement
agreement is due to several factors including a decrease in natural
gas costs to run the company's thermal plants, removal of the
Electric Energy Efficiency Load adjustment, a reduction in certain
operating expenses and adjustments for administrative and general
expenses. The original request also included an increase in the
common equity ratio and the return on equity. The specific capital
structure ratios and the cost of capital components were not
specified in the settlement agreement.
The settlement agreement includes deferred accounting treatment
related to maintenance costs for Avista's Coyote Springs 2 project
and its share of the Colstrip 3 & 4 coal-fired projects that
will address the year-to-year variability in these costs. Each year
the difference between actual maintenance costs and the amount
built into base retail rates would be deferred and amortized over
the next four-year period. The amortization amounts would be
recovered through future rate cases, as they occur.
Also included in the settlement agreement is a provision that
Avista will not file a general rate case in Washington before April
1, 2012. The UTC has up to 11 months to review and issue a decision
in a general rate case request.
Recognizing the impact of rising prices on customers, especially
limited income and senior customers, funding available under this
settlement agreement for Avista's Low Income Rate Assistance
Program (LIRAP) would increase by $370,000. The increase in funding
plus a reallocation of funds from the conservation education
program would result in an additional $550,000 in direct energy
bill-payment assistance for limited income and senior customers. In
total, annual funding available for the LIRAP program would be
approximately $3.6 million for electric customers and approximately
$1.8 million for natural gas customers. The LIRAP program is funded
through a separate tariff.
In addition to Avista, the parties to the settlement are the
staff of the UTC, the Public Counsel Section of the Washington
Office of the Attorney General, Northwest Industrial Gas Users,
Industrial Customers of Northwest Utilities and The Energy Project.
The parties' recommendation to approve the settlement is not
binding on the commission.
The Northwest Energy Coalition (NWEC), the only party to not
sign the settlement agreement, has indicated that they plan to
pursue approval of an electric decoupling mechanism in this case.
NWEC has also indicated, however, that they do not oppose other
terms of the settlement, including implementation of new retail
rates effective January 1, 2012.
Avista offers a variety of energy efficiency programs for
residential, limited income, commercial and industrial customers.
In addition to helping customers manage their energy use, the
programs also help reduce the amount of future, more costly energy
resources needed to meet customer demand.
In addition to support for energy assistance programs, Avista
also offers services for customers such as comfort level billing,
payment arrangements and Customer Assistance Referral and
Evaluation Services (CARES), which provide assistance to
special-needs customers through referrals to area agencies and
churches for help with housing, utilities, medical assistance and
other needs.
For more information about the rate process, visit
www.avistautilities.com.
About Avista Avista Corp. is an energy
company involved in the production, transmission and distribution
of energy as well as other energy-related businesses. Avista
Utilities is our operating division that provides electric service
to 357,000 customers and natural gas to 317,000 customers. Our
service territory covers 30,000 square miles in eastern Washington,
northern Idaho and parts of southern and eastern Oregon, with a
population of 1.5 million. Avista's primary, non-regulated
subsidiary is Advantage IQ. Our stock is traded under the ticker
symbol "AVA." For more information about Avista, please visit
www.avistacorp.com.
Avista Corp. and the Avista Corp. logo are trademarks of Avista
Corporation.
This news release contains forward-looking statements regarding
the company's current expectations. Forward-looking statements are
all statements other than historical facts. Such statements speak
only as of the date of the news release and are subject to a
variety of risks and uncertainties, many of which are beyond the
company's control, which could cause actual results to differ
materially from the expectations. These risks and uncertainties
include, in addition to those discussed herein, all of the factors
discussed in the company's Annual Report on Form 10-K for the year
ended Dec. 31, 2010 and the Quarterly Report on Form 10-Q for the
quarter ended June 30, 2011.
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Contact: Debbie Simock (509) 495-8031 Email Contact
Investors: Jason Lang (509) 495-2930 Email Contact Avista 24/7
Media Line (509) 495-4174
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