PSE OKs smaller rate increase

Puget Sound Energy, the state consumer advocate and other parties said Friday they compromised on a smaller rate increase than the utility had originally requested.

Washington's largest utility will now ask the state Utilities and Transportation Commission (UTC) for an electric revenue increase of $130 million, or 7 percent, and a natural-gas revenue increase of $49 million, or 4.6 percent. When PSE petitioned for a rate increase in December, it had requested $174.5 million for electricity and $56.8 million for natural gas. Later changes brought the requested total to $165 million and $55 million, respectively.

The agreement between the utility, the Attorney General's Public Counsel Office, the UTC staff and several community and industry representatives also stipulates that the basic charge will go up 98 cents to $7 for electrical service and $1.75 to $10 for gas. PSE had initially requested to raise the basic charges to $9 and $18, respectively.

The new rate schedule, if approved by the UTC, would raise a typical monthly residential electrical bill $7.65, or 8.25 percent, to about $100. A typical natural-gas customer would pay 5 percent, or $4.15, more a month, a boost to $86, PSE said. If approved, the rates would be effective on Nov. 1.

The settlement agreement will reduce the profit margin of PSE's shareholders to 10.15 percent from 10.4 percent. The utility, which has agreed to a takeover by a consortium of international investors, previously aimed to raise its profit margin to 10.8 percent.

PSE said the rate increase would allow it to recoup the money it had spent on building energy infrastructure in 2006 and 2007, as well as on rising operating costs.

In the settlement, PSE agreed to boost low-income resident-assistance programs to $15 million (up from $10 million) and to reimburse $50 to customers who report power outages exceeding 120 hours.

Poor-service penalties would increase to $15 million from $10 million per year. The utility also agreed not to ask for another general rate increase until April 2009.

The deal left one issue outstanding: a fast-track mechanism that allows PSE to ask for rate changes from swings in power costs. The UTC will evaluate the settlement proposal and the case for power cost recovery in hearings starting on Sept. 2.

Ángel González: 206-515-5644 or agonzalez@seattletimes.com