Washington state regulators cap industrial firms' electric rates

Washington state's Utilities and Transportation Commission agreed with 13 large Northwest industrial companies who argued their electricity rates are excessive. Late Tuesday, the commission ordered electric rates for the companies capped at $150/Mw-hr. The industrials argued they were in an emergency because electric bills had more than tripled, resulting in layoffs, reduced production, and even factory shutdowns.

Jan. 24, 2001

2 min read

Washington state's Utilities and Transportation Commission agreed with 13 large Northwest industrial companies who argued their electricity rates are excessive.

Served by Puget Sound Energy (PSE), Air Liquide America Corp., Air Products & Chemicals Inc., Boeing Co., CNC Containers, Equilon Enterprises LLC, Georgia-Pacific West Inc., Tesoro Northwest Co., Intel Corp., and others, sought rate relief from the commission earlier this month.

Late Tuesday, the commission ordered electric rates for the companies capped at $150/Mw-hr. The cap is a so-called �soft cap." If Puget Sound can verify its wholesale costs are higher than $150, the utility can conceivably recover the higher amount from the companies.

The industrials argued they were in an emergency because electric bills had more than tripled, resulting in layoffs, reduced production, and even factory shutdowns. Their electricity prices were linked to the Dow Jones Mid-Columbia Firm and Non-firm indices which have been escalating and experienced high volatility. This tariff was agreed on in 1996 by the companies, commission, and utility.

The commission stressed it would not impose any remedy that �impairs� Puget Sound�s ability to recover reasonable costs.

�If wholesale index prices are high, their rates are tied to costs,� the commission said in a statement. �PSE will be allowed to recover prudently incurred costs and will have the opportunity to earn a reasonable margin.�

The utility said it assessing the impact of the order.

�Puget Sound is still reviewing the decision issued. Puget Sound is concerned the result of the order will be to provide price breaks to a select few customers at the cost of increased rates to our residential and commercial customers,� says Dorothy Bracken, spokesperson for Puget Sound.

Whether Puget Sound will have difficulty recovering wholesale electricity cost and how long the new �soft cap� will remain in place will be hammered out at a Jan. 29 hearing.

Puget Sound says a better way to resolve the problem is to allow large businesses and industries to negotiate directly with a supplier for their power. The utility says it would even help facilitate contractual arrangements and then deliver the power.