State officials criticize PSE's proposed rate hike

State regulators and officials from the Washington State Attorney General’s Office are asking the Washington Utilities and Transportation Commission to pare back Puget Sound Energy's request for a rate increase.

In May, PSE asked for an increase of 7.4 percent in electric rates for all customer groups. The rate hike would take effect on April 1, and PSE said it would increase the typical electricity bill for customers — based on 1,000 kilowatt-hours of electricity — to $98.68 a month, an increase of 9.1 percent (or $8.23) from today’s rates.

PSE provides power to Whidbey Island and more than a million customers in Washington state. The proposed increase also included a 2.2 percent increase in natural gas rates.

If approved, the rate increase would increase PSE's electric revenues by more than $148 million. The request is currently under review by the Washington Utilities and Transportation Commission, and a decision is expected in the spring.

Commission staff said yesterday that most of the rate request should be rejected, and suggested an increase of 30 cents, for a proposed $92.61 total monthly bill.

The Public Counsel Section of the Washington State Attorney General’s Office said today the rate request was "excessive and unsupported."

“This is PSE’s 10th request since 2002 to increase electric rates,” said Simon ffitch, chief of the Public Counsel Section. The section represents residential and small business customers in utility rate cases.

“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,” he said.

The Public Counsel Section noted numerous components of PSE's rate request that should be rejected or modified. Included in those, section staff said ratepayers should be credited with $51 million in revenues from PSE’s sale of wind power credits to California, and said the company's shareholder profit margin should be dropped from 10.15 percent to 9.5 percent, rather than allowing it to rise to 10.8 percent as PSE has requested.

The Public Counsel Section also said the state should reject a proposed increase in the monthly customer charges for service, and remove roughly $50 million in expenses that PSE has claimed for its Mint Farm gas-fired power plant in Longview.

It also said company shareholders should help pick up the costs of liability insurance for PSE officials, the cost of the company's supplemental retirement plan for PSE’s highest paid officers and executives should be eliminated, and the company should also remove the "excessive" expenses of $540,000 for private aircraft charges in its request.

If the suggestions from the Public Counsel Section are adopted by the commission, PSE would receive $43 million less from electric rates than the amount the company is seeking.

In an earlier statement, Stephen P. Reynolds, president and CEO of PSE, said the Bellevue-based utility had worked hard to manage costs and minimize the size of its electricity rate increase proposal.

He said the salaries of company officers had been frozen, and major projects were undergoing additional scrutiny.

Company officials also said the rate increase was unrelated to the recent merger of PSE, Puget Energy and Puget Holdings LLC.

Puget Energy, the parent company of PSE, was sold with PSE earlier this year to Puget Holdings, a group of long-term infrastructure investors, for $7.4 billion.

Puget Holdings is made up of Macquarie Infrastructure Partners, the Canada Pension Plan Investment Board, the British Columbia Investment Management Corporation, Alberta Investment Management Corporation, Macquarie-FSS Infrastructure Trust and Macquarie Capital Group.

PSE officials said no expenditures that stem from the merger will be paid for by PSE customers.

The commission has already received more than 130 comments from the public on the rate-hike proposal, with 125 of those opposing the rate request.

Customers can comment on the proposal by e-mail to, by phone at 1-888-333-9882, or by mail to PO Box 47250, Olympia, WA 98504.

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