Wednesday, August 22, 2001 - 12:00 a.m. Pacific

PSE seeks to boost electricity rates 18%

By Seattle Times staff and wire services

Puget Sound Energy yesterday filed for a rate increase that could boost residential electricity bills by about 18 percent beginning in November.

Company officials said the increase is needed to recover $84 million in costs incurred in the fluctuating energy market. The change would increase the average residential customer's monthly power bill $11.06, to $71.80, said Grant Ringel, a PSE spokesman.

It would affect all categories of PSE's variable-rate program that depends on time-of-day use. "Our net power costs now are higher than we are currently recovering from our customers," he said.

An investor-owned utility, the Bellevue company must get approval for electricity-rate increases from the Washington Utilities and Transportation Commission.

The 18 percent increase is based on company projections, Ringel said, and customers could pay less or more depending on the company's power costs.

The request grows largely out of wholesale-energy price caps set earlier this summer by the Federal Energy Regulatory Commission, according to Ringel. The FERC action has made it harder for PSE to recover expenses through selling power on the market, he said.

PSE is asking for an interim rate increase, which could lead to a fast-track hearing on the 18 percent proposal. If approved, the new rates would take effect Nov. 1 and continue until a wider revision of the company's rates is completed more than a year from now.

In a general rate case, which can take 11 months to resolve, hearings cover a wide variety of issues — including corporate salaries, construction costs and operating costs. A hearing on interim rates can be narrowed to specifics, such as a company's costs exceeding income from customers, said Tim Sweeney, spokesman for the state utilities commission.

But it's not clear whether Washington regulators will bail out a company for losses suffered through speculation in the energy market and the intervention of a federal agency.

"We've never dealt with anything like this before," Sweeney said. He said commissioners could grant the change but reserve the option to recoup ratepayers' money later.

Puget Sound Energy, which serves more than 1.2 million electric and gas customers in Washington state, said its plan "is critical to maintaining the financial health of the company" in light of California's power crisis, which has hurt other Western states.

"Timely recover of PSE's costs is critical to ensuring that we keep our customers' rates reasonable and fulfill our customer-service obligations," Rick Hawley, PSE vice president, said in a news release.

The price of electricity on the wholesale market has dropped dramatically since winter — from highs of more than $500 a megawatt hour to as low as $30 a megawatt hour. But other utilities around Puget Sound have also posted rate hikes.

By October, Seattle City Light's residential customers will be paying an estimated 50 percent more than before the rate increases began in January.

Snohomish County Public Utility District customers will likely be paying up to 50 percent more than last year's prices come October.

Rates in Tacoma, however, are expected to decline this fall. They now are 50 percent higher than they were last year; with the expected decline, they would be 35 percent higher.

Avista Utilities of Spokane has already asked regulators in Washington and Idaho for electricity-rate surcharges to cover similar losses. If approved, the 36.9 percent surcharge in Washington would mean an average Avista customer in Eastern Washington using 1,000 kilowatt-hours per month would pay an additional $16.26.

Avista also blamed the federal caps that lower the price it gets for sales of its surplus power.

Information from The Associated Press and Bloomberg News is included in this report.

http://seattletimes.nwsource.com/html/localnews/134332205_psehike22m.html

-- Martin Thompson (mthom1927@aol.com), August 22, 2001