Avista’s three-year rate plan denied by Washington regulators; small electric increase approved

Washington regulators shot down Avista’s request for three years of rate hikes on Thursday, approving a one-year increase in electric rates instead.

The Spokane-based utility is in the midst of major changes – including a proposed sale to Hydro One Ltd. of Toronto – that weigh against approving a multiyear rate plan, the three-member Utilities and Transportation Commission wrote in its decision.

Instead, Avista received approval to increase electric rates 2.7 percent for residential customers starting May 1. Natural gas rates will decrease 1.2 percent.

Avista’s savings from the 2017 federal tax reform bill tempered the impact of the electric rate increase and contributed to the natural gas decrease. In January, the UTC told utilities they had to pass tax-related savings onto customers.

Base rates for Avista’s electric customers reflect the return of about $26.9 million in corporate tax savings. For natural gas customers, the base rate reduction includes about $5.5 million in tax savings.

Customers will see additional credits from the federal Tax Cuts and Jobs Act on their utility bills over the next year. Those credits will be identified in a separate line item.

With both credits in place, a typical household using 938 kilowatt hours of electricity per month will see electric bills increase by $2.33 monthly, for a total of $89.42.

For natural gas, a typical household using 65 therms of gas monthly would see its bill decrease by 70 cents per month, for a total of $57.44.

The UTC will consider returning an additional $10.4 million in tax savings to Avista customers as part of the sale to Hydro One. The commission is expected to vote on the sale by mid-August.

Thursday’s decision includes an extra $350,000 for funding low-income weatherization for Avista’s electric customers.

In May, Avista filed its request for three years of rate increases, including a first-year electric rate hike of 12.5 percent and a 9.3 percent natural gas rate hike. The company’s requested increases tapered in the second and third year.

Casey Fielder, an Avista spokeswoman, said company officials were reviewing the UTC’s decision and had no immediate comment.

The UTC regulates investor-owned electric and gas utilities in Washington. The commission is charged with ensuring that utilities provide safe and reliable service at a reasonable rate, while allowing them the opportunity to earn a fair profit.

Avista serves about 240,000 electric customers and 153,000 natural gas customers in Washington.