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PSE seeks rate hike for investors
With its shareholders claiming that its stocks could soon reach junk bond status, Puget Sound Energy is hoping to convince the state this week that it needs more rate relief than regulators are willing to give.
On Thursday, PSE and staff members of the Washington Utilities and Transportation Commission will face off in Olympia in a quasi-judicial hearing in front of the agency's three commissioners. At stake for the company is $170 million it wants to get out of electricity customers. For those customers, including those who live on Whidbey Island, the stakes are a rate hike that could increase the average residential bill by $3 per month and business customers' bills by about $8.60.
The two sides in the hearing are at odds over how much temporary rate relief PSE should receive. PSE is asking for $170 million. The WUTC is offering $42 million. Grant Ringle, a spokesman for PSE, said last week that even though the WUTC isn't offering what the utility wants, the amount offered still acknowledges the company's need.
"We're gratified that many parties agree financial relief is needed," he said.
At Thursday's hearing, the WUTC commissioners could choose to accept the staff recommendation, or could decrease or increase the amount of rate relief. Tim Sweeny, a spokesman for the WUTC, said the agency has concluded some rate relief is warranted. If approved, the rate relief will allow PSE to immediately increase the price it charges for electricity.
"The idea is the company is needing something as soon as possible," Sweeny said.
But WUTC staff claim that PSE could do a better job at keeping its finances in order. While Ringle said PSE is suffering financially due to its efforts in recent years to keep the cost of power low, WUTC staff say the company could get itself on a firmer financial footing using methods other than a wholesale rate increase. In a January press release from the WUTC, those recommendations included issuing new common stock and reducing stockholder dividends.
The latter solution may not fly with PSE shareholders. In a Nov. 28, 2001 letter to all PSE shareholders, 10 of the utility's stock owners encourage everyone who owns a piece of the company to write to the WUTC and state legislators to push for rate increases to protect the company's stock dividends.
The WUTC's financial management suggestions may not make much of an impact with PSE itself. Ringle said that while PSE will listen to WUTC staff, the company will make its own business decisions.
"It's the responsibility of the company to manage our business," he said.
If the WUTC does approve temporary rate relief, the measure has a fail-safe valve. Currently in the midst of examining a general rate case for PSE, the WUTC commissioners can require the utility to pay back any of the rate relief money it receives from ratepayers beyond what it needs to maintain its viability.
Sweeny said the WUTC plans to finish work on PSE's general rate case in October. The utility is asking for an across-the-board, 18 percent rate increase.