Bryan Cohen Oct. 25, 2012, 6:33pm

SEATTLE (Legal Newsline) - Washington Attorney General Rob McKenna's Public Council Section questioned proposed rate increases on Tuesday for the Spokane-based utility company Avista.

Avista, the Washington Utilities and Transportation Commission and other parties filed a non-unanimous multiparty settlement on Friday in Avista's general rate case. McKenna's PCS did not sign the settlement and questioned the agreement's guaranteed, back-to-back, annual rate increases.

Simon ffitch, PCS' division chief, said that the rates would go into effect in the midst of winter heating season. Without the settlement, new rates ordered by UTC would not have gone into effect until March. The division chief said that testimony and evidence actually pointed to the need for a rate reduction as opposed to an increase and that customers can no longer afford annual rate increases.

The settlement also calls for a higher shareholder profit margin than the one recommended by the Industrial Customers of NW Utilities and UTC staff. Additionally, it neglects to address key issues such as board of directors costs, executive compensation, attrition, image advertising and non-utility related corporate aircraft use, McKenna claims.

Avista's original request sought rates that would create an additional $40.9 million in revenue from electric customers and $10.1 million in revenue from natural gas customers. The proposed settlement would create a three percent rate increase for electric service of $13.7 million in 2013 and an added three percent rate increase of $14 million in 2014.

While the settlement calls for credits from the ERM account to offset increases, the credits would expire at the close of 2014 and lead to a two percent increase in 2015. That increase would be in addition to any increase Avista requests during its 2014 general rate case.

The PCS said it cannot support the proposed settlement as is.

The PCS can file testimony to oppose the proposed settlement on November 9, while proponents of the settlement may file a rebuttal testimony on November 19. Hearings on the settlement will begin at the headquarters of the UTC on November 29 and 30. The settlement will not take place unless approved by the UTC, and if the settlement is rejected, a full hearing would be held on recommendations to reduce rates.

Avista serves approximately 149,000 natural gas customers and 236,000 electric customers in Eastern Washington.

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