PSE rate increase criticized

State officials question plan

JOHN DODGE, THE OLYMPIAN

OLYMPIA -- A Puget Sound Energy request to temporarily raise electric rates 21.6 percent was challenged on two fronts Wednesday.

The increase should be limited to 6.3 percent, according to staff of the Washington Utilities and Transportation Commission, whose three members will rule in the case early this spring.

The state attorney general's Office of Public Counsel, which represents ratepayers in the case, urged the commission to reject any rate increase, saying Puget Sound Energy should reduce dividends it pays to stockholders rather than sock ratepayers with higher rates.

All of the issues raised by the staff and the attorney general will be aired and debated in hearings on the rate case in February, Puget Sound Energy spokesman Grant Ringel said.

The Bellevue-based private utility serves 935,000 customers, including all of Thurston County. It seeks to boost revenue by $170 million with the interim rate increase.

Company officials said they need a rate increase from March through October to offset excess power costs.

But the commission staff said Wednesday that a $42 million infusion of cash through higher rates would be enough to serve the power needs of customers, pay dividends and provide the utility a financial cushion to respond to emergencies.

"A grant of cash relief is appropriate in view of the serious concerns regarding energy markets," said Lisa Steel, assistant director of the utility commission staff's energy division. "Most importantly, the company is not financially prepared for another crisis."

Steel referred to the chilling effect of energy giant Enron Corp.'s collapse on credit markets and the economic recession as threats to the investor-owned utility's financial health.

"We appreciate the fact the UTC staff recognized the need for prompt, interim relief," Ringel said.

Assistant Attorney General Simon ffitch said his office's review of company finances paints a different picture.

The company is using all of its earnings to pay stock dividends, which is nearly double the industry average for combined gas and electric utilities, ffitch said.

And the utility's parent company -- Puget Energy -- has been spending millions of dollars lately to purchase unregulated companies, he said.

"Ratepayers shouldn't be asked to shoulder the burden for above-average dividends and the company expansion into unregulated, unrelated industries," Attorney General Christine Gregoire said.

The commission staff recommendation would boost the typical residential electric bill by about $3.60 a month. The utility request would raise the monthly bill about $12.60.

An average monthly bill for residential customers is about $58.50, according to utility commission estimates.

The utility commission last October rejected the company's request for an interim rate increase that would have boosted a typical residential power bill by about $11 a month. The commission said the utility failed to offer enough evidence that the company's financial condition warranted an emergency rate increase.

The company last November also filed a request for a permanent boost in electric rates of 16.5 percent to go into effect after the temporary rate expires. State regulators will take nearly a year to decide on the filing, called a general rate case.

John Dodge covers environment and energy for The Olympian. He can be reached at 360-754-5444.

On the Web:

- Puget Sound Energy

- Utilities and Transportation Commission

What's next

The Washington Utilities and Transportation Commission will have a public hearing at 6:30 p.m. Feb. 21 to take comments on a 21.6 percent temporary rate increase request by Puget Sound Energy. The commission office is at 1300 S. Evergreen Park Drive S.W., Olympia.

The Olympian Copyright 2002

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