Today, Avista announced that a settlement has been reached to extend the current rate plan in Idaho. The settlement proposes that there would be no increase in base retail rates for customers prior to 2016.
What Does This Mean?
The extension of the current rate plan provides rate stability for customers and is the result of a collaborative process. It is an outcome that is beneficial for our customers and the company.
· Unchanged base retail rates
· Maintained level of rebates that customers currently receive
· The opportunity to balance the recovery of costs of providing safe and reliable energy and the company’s opportunity to earn a fair return
Details of the Proposed Settlement
The details of the proposed settlement demonstrate what can be a complex process and topic.
· Replacement of two rebates that are set to expire on Jan. 1, 2015 that are currently reducing customers’ monthly energy bills by 1.3 percent on the electric side and 1.7 percent on the natural gas side.
· An estimated $3.7 million increase in pre-tax margin in 2015 for Idaho operations.
· Deferral of the majority of costs related to completion of Avista’s customer information system upgrades in 2015, as well as a change in the timing of expenses related to operations and maintenance (O&M) costs pertaining to its Colstrip and Coyote Springs 2 thermal generating facilities.
· Use of any deferral balance resulting from the 2014 Idaho earnings test to support up to a 9.5 percent return on equity (ROE) in 2015.
· If the company earns more than its currently authorized 9.8 percent ROE in 2015, 50 percent of the earnings above 9.8 percent would be deferred for future ratemaking.
PGA and PCA Adjustments
The proposed settlement applies to base rates. Avista will file annual rate adjustments including the Power Cost Adjustment (PCA) and Purchased Gas Cost Adjustment (PGA). These adjustments balance the actual costs of purchasing or generating energy and natural gas to serve customers and the amounts currently covered in rates, and are typically filed in the third quarter every year.
The settlement has been filed with and must be approved by the Idaho Public Utilities Commission (IPUC or Commission).
Read the announcement news release.