Northwest utility proposes novel rate plan

High wholesale electricity prices in the Pacific Northwest have caused investor-owned utilities to rethink customer rates at a time the market is plagued by short supply and spiking prices. Avista Corp. is seeking regulatory approval to recover in rates the costs of purchased power for the winter peak, and Portland General Electric Co. proposed Thursday a plan that will allow it to capture the benefits or share the losses of the volatile market with customers.


Ann de Rouffignac
OGJ Online


High wholesale electricity prices in the Pacific Northwest have caused investor-owned utilities to rethink customer rates at a time the market is plagued by short supply and spiking prices.

Avista Corp. is seeking regulatory approval to recover in rates the costs of purchased power for the winter peak, and Portland General Electric Co. proposed Thursday a plan that will allow it to capture the benefits or share the losses of the volatile market with customers.

The Portland General proposal submitted to the Oregon Public Utility Commission (PUC) allows the company to sell excess power in the market and share the proceeds with customers. If customers use less power than expected, the company makes money selling that power elsewhere. Customers will get 90% of the gains and the company 10%.

Likewise, if the utility sells power at a loss or has to buy extra supplies on the spot market to meet customer demand, customers will shoulder 90% of the loss. The utility will defer to the commission when the gains or losses would actually show up on customers� bills.

�The less power customers use, the more surplus we could have available to sell, keeping customer bills down,� says Pamela Lesh, Portland General�s vice-president for rates and regulatory affairs.

The idea is expected to give customers a powerful incentive to use energy efficiently and conserve, she adds. The company buys about 25% of its power on forward contracts, 25% under long-term contracts, and generates the rest.

�We did a good job of buying power forward,� says Kregg Arntson, spokesman for the utility. �We want to sell the surplus.�

As part of this proposal, the utility withdrew its general rate case filed in November that includes a 16.5% rate increase that was supposed to begin Jan. 1, 2001.

Avista Corp., on the other hand, is seeking permission from Washington regulators to recover winter peaking power costs. It already has received a deferred accounting order that allows the company to amortize and receive an approved rate of return on unrecovered power cost balances. The order covers expensive power purchases made during the summer.

But now Avista has submitted an amendment to that order to add winter peaking costs to the deferred balances. Those expenses will be recovered in rates at a later date.

�The deferred accounting order gives us some breathing room to see how we will implement the cost increases in rates,� says Steve Becker, spokesman for Avista.

More in General Interest