Puget Sound Energy (PSE; Bellevue, Washington) filed an electric and natural-gas rate-increase proposal with state regulators designed to strengthen the utility financially, so that it can enhance customers' service and stabilize energy costs, long term. Washington state's official energy policy recommends utilities regain control of the energy supplies their customers need and limit customers' exposure to the price volatility of the open energy market. PSE's filing with the Washington Utilities and Transportation Commission (WUTC) is part of the utility's strategic response to that government policy.
“We agree with state policymakers that the best way to ensure reliable service and hold down consumers' energy costs, long-term, is for utilities to have more control over their electricity and natural-gas resources,” said Kimberly Harris, PSE's vice president of regulatory and government affairs. “And to do that, utilities must be financially strong enough to invest wisely, up front, in the people and energy resources required to serve their customers.”
“We realize a rate increase is not popular,” Harris said, “but the payback for our customers is greater reliability of service at a more stable, reasonable price over the long run.”
With a stronger financial profile, Harris noted, PSE will be in a better position to secure reasonably priced investment capital and to more aggressively protect customers through “hedges” that act as insurance against wholesale energy price spikes, or the rate effects of poor hydropower conditions. Key elements of PSE's “general rate case” filing include a request to recover the costs of extending and upgrading facilities to serve a growing number of gas and electric customers, and a request for the opportunity to increase the utility's return on equity.
The WUTC conducts a thorough review of a utility's operational costs and revenues before issuing a decision on a general-rate-case filing. The review can take up to 11 months. In the meantime, PSE is anticipating a WUTC decision later this month on the utility's 2003 request for a separate electric-rate increase tied specifically to higher power-supply costs. If both the general rate-case request and the “power-cost-only” rate case (PCORC) are approved in full by the WUTC, PSE's electric and natural-gas rates would still compare favorably with neighboring utilities in the Northwest and would remain considerably below national averages.
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