Pacific Power seeks 20 percent hike in electricity rates

March 2, 2010

Pacific Power is seeking a 20 percent increase in electricity rates starting next January to cover major investments in transmission and generation as well as forecasted higher power costs next year, according to filings with the Oregon Public Utility Commission.

The company also intends to file an additional request for a rate increase of about 1.5 percent later this year to cover the eventual removal of dams on the Klamath River.

Pacific Power is Oregon's second largest investor-owned utility. It's 553,000 Oregon customers are spread in pockets throughout the state, from the coast to Portland, and from Enterprise and Bend to Klamath Falls and Medford. Its territory includes some of the areas in Oregon hardest hit by the recession.

The new requests come on top of rate increases earlier this year that added about 5 percent to customers bills. They also come as the state's largest electric utility, Portland General Electric Co., has filed a request for a 7.4 percent rate increase.

Pacific Power's request is "a whopper," said Bob Jenks, executive director of Citizen's Utility Board of Oregon, a ratepayer advocacy group. "In the economy we're in today, where many of their customers are struggling to pay their bills, this is going to be really difficult for folks.

Industrial customer advocates said they were astonished by the size of the rate increase and the fact that the company wasn't staggering some of its capital investments to alleviate the resulting rate shock.

Company officials acknowledged that it's a terrible time for rate increases, but said the investments were in many cases being driven by state and local mandates for more renewable power and pollution controls.

"We understand the timing is horrible with so many facing ongoing economic distress, but these are good long-term investments that we're making on behalf of our customers," said Jan Mitchell, a company spokeswoman.

The company told regulators it needs a 13.1 percent general rate increase to recover the costs of new transmission lines, two wind farms in Wyoming and pollution control equipment at a coal plant. The company is also requesting an increase in its allowed profit margin. The overall capital investment exceeds $2 billion across its six-state system, more than half of it for new wind farms and transmission capacity. The share of those investments allocated to Oregon customers is about $470 million.

In a separate filing, the company is also forecasting a 7 percent increase in power costs, an expense that is passed through to customers. While wholesale power prices have been low, the company says it is facing the expiration of long-term contracts for low-priced hydropower, the expiration of a fixed-price gas contract, and costs associated with integrating intermittent wind power.

Overall, the company said an average residential customer using 900 kilowatt hours of electricity would see their monthly bill increase from $80.96 to $96.78 in 2011. The power cost portion of that monthly increase, $4.81, is subject to change based on what happens in wholesale power markets later this year.

Regulators will examine the specific elements of the rate requests over the next nine months to determine what increase is justified.

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Source: http://www.oregonlive.com/business/index.ssf/2010/03/

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