Electricity rates may soon drop

the olympianJanuary 6, 2007 

Customers could get a break in their electric bills by mid-month - just in time for the winter cold in South Sound.

Even though the state Friday approved a 1 percent rate increase for Puget Sound Energy customers, costs could go down.

The reason: Wholesale prices to fuel power plants are dropping.

"We need to rerun our power cost numbers," said Kimberly Harris, PSE vice president of regulatory and government affairs. "We think there could be a slight rate decrease on the electric side."

The state Utilities and Transportation Commission allowed slight increases in electric and natural gas costs - but nowhere near what PSE had asked for.

The 1 percent rate increase approved by the three-member commission was about half of what the company most recently requested in what has been an 11-month rate case.

Meanwhile, the utility's 700,000 natural gas customers will see a 3.2 percent rate increase, compared with the 5.3 percent requested by the company.

Gas customers also face a $2-per-month boost in their service charge, making it $8.25 a month, well below the $17 monthly fee sought by the company.

"We find that PSE's proposed increase to the residential customer charge is simply too much change, too fast, from a customer perspective," the commissioners said in their written order.

Overall, natural gas bills for a typical residential customer will climb about $2.84 per month.

The UTC order also provides an increase of $1.75 million for community programs that help PSE's low-income customers pay their winter heating bills.

The utilities commission also set 10.4 percent as the rate of return on investment for the company, up from 10.3 percent. The company had asked for an 11.25 percent rate of return.

Harris said falling wholesale prices for natural gas used to fuel power plants might be enough to turn the electric rate increase into a slight decrease for the 1 million homes and businesses served by PSE.

She said natural gas customers won't benefit from the drop in wholesale gas prices because the rate increase is to raise revenue to pay for gas line extensions and other nonfuel costs to serve customers.

The new rates will go into effect within a week to 10 days when the company files its new tariffs with the UTC.

The commission also approved a three-year pilot program that will earn the state's largest investor-owned utility extra money if it meets or exceeds energy conservation goals.

Consumer savings

Electric rates go up 1 percent, about half what was requested.

Natural gas goes up 3.2 percent; 5.3 percent was requested.

Gas service charge is $8.25 a month; company sought $17.

Increase of $1.75 million to help low-income customers pay winter heating bills.

Rate of return 10.4 percent; company sought 11.25 percent.

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