YAKIMA, Wash. — Pacific Power is requesting a boost in rates that would raise the typical homeowner’s monthly bill by $15.84 to a total of $93.58.
The request, now before the state Utilities and Transportation Commission, is to increase rates for all customers — including residential, low-income and industrial — by 14 percent, or $42.8 million annually.
The proposal will be hashed out in legal proceedings that often take nearly a year to resolve and involve the utility, residents, industrial users, state regulators, environmentalists and paperwork. Lots of paperwork.
Since making its request Jan. 11, the utility has delivered 10 boxes stuffed with documents to the commission. More is expected. Last year, a request by Puget Sound Energy topped out at 87 boxes.
“The burden of proof is on the utility to prove that they need the amount of money they’re asking for,” said Marilyn Meehan, a spokeswoman with the commission.
Since 2003, Pacific Power’s residential rate has increased by about 85 percent, putting its rates close to those of Benton County Public Utility District and Benton Rural Electric Association, a nonprofit cooperative. Rates for those two utilities have risen less than 10 percent during the past 10 years, but until last year, both were higher than Pacific Power. The average monthly residential bill is $71.73 for the district and $84.20 for the association. Both utilities serve areas bumping up against parts of Pacific Power’s customer base of slightly more than 100,000 homes, businesses and farms in Yakima County. Pacific Power also services another 30,000 in southeast Washington.
Pacific Power’s latest request is driven largely by increased cost of power production, infrastructure investments and declining consumption, according to the testimony of the utility’s CEO Patrick Reiten, which was filed with the commission.
The company has spent more than $20 million upgrading its Washington hydroelectric facilities, a Wyoming coal plant and other infrastructure, such as power lines, said Jan Mitchell, a spokeswoman for Pacific Power.
Another $12 million is necessary to cover rising costs of power production. Pacific Power must buy some energy from independent producers, and market prices have risen, Mitchell said.
The company also wants to raise rates to make up for the overall decline in electrical use that it attributes to penny-pinching related to the economic recession and consumers using more energy-efficient appliances. That would net about $4 million, Mitchell said.
About $1.2 million of the increase would go to the company’s shareholders, she said.
Investors are critical to the system, said Jeffrey Goltz, the commission’s chairman.
“We rely on investors to front the money to build the plants, and they do that because they get to earn a return on investment,” he said.
Commissioners will decide on the request based on information from a variety of sources, including the utility, consumer advocacy groups, industry and the commission’s own analysts.
“They’ll go through every single dime of that and what it is for,” Meehan said.
Since it is a legal case, the analysts work independently of the commission members.
“We’re on one wing of the building, and we decide these things,” Goltz said. “The commission staff who put on cases are in another wing — and we meet in the restroom. But we don’t discuss cases there.”
In the end, rate increases are generally lower than what was requested. In a few cases, the commission has denied a rate increase request, and instead required a decrease, Meehan said.
Last year, Pacific Power asked for $12.9 million and settled for a $4.5 million.
Mitchell said the company doesn’t bulk up its requests as a negotiating strategy.
“We put together a really thorough case” with the best information available, he said.
But the state’s lawyer representing consumers in the case is more skeptical.
“Whether a company makes a conscious decision to do that, I can’t say, but there is a discernible pattern,” said Lisa Gafken of the Attorney General’s Office.
As public counsel, her goal is to ensure “that the customers are not paying more than they’re supposed to,” she said. “We certainly have some concerns in this case.”
The company’s request, which she said she is still reviewing, includes raising residential customers’ monthly service fee from $6 to about $10. That is a big increase, especially for low-income customers, she said. The flat fee is meant to cover fixed costs, such as running power lines to customers.
Everyone pays the same amount because it’s the cost of having access to electricity, not for using it. But since it’s fixed, people with less money feel it more and can’t do anything to reduce the percent it takes out of their wallet.
The Opportunities Industrialization Center of Washington, which distributes state and federal energy grants for the poor, is already seeing a spike in people seeking help with their energy bills, said John Riggins, the nonprofit’s director of community services in Yakima Valley.
Riggins said he is skeptical of rate requests from investor-owned utilities, especially since they seem to be making them with increasing regularity.
For that reason, rate case settlements have increasingly required utilities to wait a certain amount of time before making another request, Meehan said.
In Pacific Power’s last settlement, which the commission approved in March, it agreed not to file for another increase before Jan. 1.
The commission also holds public hearings. For Pacific Power’s last rate request, they were in Yakima and Walla Walla. No dates or locations have been set for the current case.
In the end, the commission either decides what the rate should be based on the evidence and testimony presented by various the parties, or it approves a settlement reached by some or all the parties.
Either way, the commission has the final say, Gafken said.
• The online version of this article has been updated to correct that an upgraded Pacific Power coal plant is in Wyoming, not Montana.