Late last week Avista announced that it had made multiple filings with the Washington Utilities and Transportation Commission (WUTC or Commission) that, if approved, would allow the utility to recover costs for infrastructure and other investments without increasing customer bills.
The filings include electric and natural gas general rate cases, a tax customer credit, and a deferral request related to implementation of the Company’s Wildfire Resiliency Plan.
“The last year has been punctuated by the unprecedented COVID-19 pandemic and crisis, and we’ve all had to quickly adapt as things changed so significantly,” Avista President and CEO Dennis Vermillion said.
Vermillion added that despite the pandemic, the utility “continued to install smart meters, replace wooden distribution poles, take steps to meet our clean electricity goals, invest in customer facing technology, replace natural gas pipe, upgrade substations, protect against wildfire and much more.”
He said those activities are of course costly and the utility must recover those costs and that by using a Tax Customer Credit, Avista’s proposal would completely offset an immediate increase in electric and natural gas bills, he said.
Residential Customer Bills
Overall, changes in electricity prices have been approximately 1% higher per year and natural gas prices 2% lower, on average, since January 2016. This is lower than the rate of inflation during this time period, when compared to the Consumer Price Index. On average, the total monthly cost of Avista’s residential electric service is 33% lower than the national average, for investor-owned utilities.
If approved, the electric general rate request is designed to increase annual billed revenues by $44.2 million or 8.3%, but at that same time be fully offset with a Tax Customer Credit of the same amount. The net result would be no change in billed revenues effective October 1, 2021.
Residential electric customers in Washington using an average of 914 kilowatt hours per month could expect to see no monthly bill change from $82.33.
If approved, the natural gas general rate request is designed to increase annual billed revenues by $12.8 million or 7.9%, but at that same time be fully offset with a Tax Customer Credit of the same amount. The net result would be no change in billed revenues effective October 1, 2021.
Residential natural gas customers in Washington using an average of 67 therms per month could expect to see no monthly bill change from $56.53.
Tax Customer Credit
To mitigate the proposed base rate increase on customers, Avista is proposing a Tax Customer Credit. During 2020, Avista identified that there was opportunity to change the current methodology related to the treatment of certain tax items, whereby certain tax benefits could be passed along to customers over a shorter timeframe than over the life of those very long-lived assets, as is the current practice.
For Washington, the total is $58.1 million (electric) and $28.2 million (natural gas), and the utility is proposing to amortize those consistent with approved balances up to two years only. As part of the proposal, any remaining balance, plus the on-going annual deferred balances, would be included in future rate proceedings and amortized over a 10-year period going forward.
“We’re mindful of when we file rate cases to minimize the impact to our customers and have chosen to move forward at this time to reduce a more significant financial impact for customers in the future. We understand that it’s challenging and often frustrating when we file rate cases and that many people are struggling right now. This is why we’ve worked hard to identify how we can move forward in a way that doesn’t increase the burden for our customers at this time while also acknowledging the financial investment we’ve made in infrastructure, on their behalf,” said Vermillion.