Public Counsel recommends cuts to PSE’s electric and gas rates

SEATTLE – The Public Counsel Section of the Washington State Attorney General’s Office today challenged electric and gas rate increases proposed by Puget Sound Energy (PSE).

If granted in full, PSE’s request will generate an additional $183 million in revenues. Simon ffitch, chief of the Public Counsel Section, which represents residential and small business customers in utility rate cases, called the request excessive and unsupported.

 “This is PSE’s 10th request since 2002 to increase electric rates,” ffitch said. “In this economy, PSE could be doing a better job of finding a way to live within its means, just like families and small businesses are doing, and hold the line on these constant increases.”

Bellevue-based PSE, Washington’s oldest and largest energy utility, serves more than 1 million electric customers and 725,000 gas customers in Western Washington. This is the company’s first general rate case since it was acquired by Macquarie Group, Ltd. and Canadian investors last year.

Public Counsel filed expert testimony today which analyzes numerous elements of PSE’s proposal. Highlights of the Public Counsel review include recommendations that the state Utilities and Transportation Commission:

• Credit ratepayers with $51 million in revenues from PSE’s sale of wind power credits (“Renewable Energy Credits” or “RECs”) to California. PSE gets “renewable energy credits” for producing wind power at its Hopkins Ridge and Wild Horse wind farms. These credits can be sold to other utilities.
• Decrease the company’s shareholder profit margin to 9.5 percent from its current level of 10.15 percent, rather than allowing an increase to 10.8 percent as the company requests.  This decrease removes approximately $53 million from PSE’s request.
• Remove approximately $45 million nearly $50 million in expenses for the Mint Farm gas-fired power plant in Longview, Washington.  PSE has not shown it needs the power or that the plant is cost-effective. [EDITED 11/24/09]
• Correct significant understatements of revenue PSE receives from selling power in the wholesale market.
• Reject a proposal for a “conservation adjustment” that would increase revenues based on estimates of how much less power customers would use through conservation.  This reduces the rate request by more than $4 million $5 million. [EDITED 11/24/09]
• Remove $540,000 of expenses due to PSE’s operation of its own aircraft.  PSE’s private aircraft expenses are excessive when compared to equivalent commercial airline travel and car rentals for business-related travel for PSE employees.
• Eliminate the cost of the supplemental retirement plan (SERP) for PSE’s highest paid officers and executives.
• Require company shareholders to pay half the costs of liability insurance to cover PSE directors and officers.  While shareholders benefit from this insurance, they don’t currently help pay for it.
• Reject proposals to increase the monthly customer charge for gas and electric service.

Public Counsel concludes that PSE can reduce its revenues from today’s levels and still maintain operations. If all of Public Counsel’s recommendations are accepted by the UTC, PSE would receive approximately $38 million $43 million[EDITED 12/7/09] less from electric rates and $330,000 less from natural gas rates. PSE’s total annual operating revenues are more than $2 billion.

PSE will have an opportunity to file rebuttal testimony addressing the recommendations of Public Counsel and other parties. Hearings to cross-examine expert witnesses will begin in mid-January 2010. The UTC will examine the testimony and evidence presented by PSE, Public Counsel and other parties, and issue a rate decision by April 2010.

PUBLIC COMMENT:
Members of the public can comment on the rate case in a number of ways.

The Commission will hold three public comment hearings:

• Bremerton:  Monday, Dec. 7, 2009, from 6 to 7:30 p.m., at Norm Dicks Government Center, 345 6th Street in Suite 600.
• Kirkland: Thursday, Dec. 10, 2009, from 6 to 7:30 p.m., at Lake Washington Technical College, 11605 132nd Avenue NE in the auditorium.
• Olympia: Tuesday, Jan. 19, 2010, from noon to 1:30 p.m., in the Commission’s Hearing Room on the second floor of the Richard Hemstad Building, 1300 S. Evergreen Park Drive S.W. 

Written comments may be sent to UTC, P.O. Box 47250, Olympia, WA, 98504 or via e-mail to comments@utc.wa.gov. Include your name and mailing address, the name of the company (PSE), and docket no. UE- 090704/UG-090705 (electric and gas).

The Public Counsel Section advocates for the interests of consumers on major rate cases, mergers and other rulemakings before the UTC. Public Counsel also advocates for consumers in court appeals, through technical study groups and before the Legislature and other policy makers. The office maintains contact with the public through a citizen advisory committee, community organizations, public hearings and personal contact with consumers in major cases. More information about Public Counsel’s work is available online at atg.wa.gov/utility.aspx
 

-30-

Contacts: Kristin Alexander, Media Relations Manager - Seattle, (206) 464-6432
Simon ffitch, Public Counsel Section Chief, (206) 389-2055

Editor’s Note: The spelling of Simon ffitch is correct – the surname begins with two lowercase f’s.