Washington Commission Focuses on Protecting Customers During the COVID Pandemic in Puget Sound Energy Rate Case

On July 8, 2020, the Washington Utilities and Transportation Commission (Washington Commission) rejected Puget Sound Energy’s (PSE’s) proposed rate increases for electric and natural gas customers and instead authorized much smaller increases that effectively provided a less than one percent increase. The Washington Commission’s decision reflects the Washington Commission’s efforts to protect ratepayers during the COVID-19 pandemic.  

On June 20, 2019, PSE initially requested a general rate increase of $140 million (or 6.9 percent) for electricity rates and $65.5 million (or 7.9 percent) for its natural gas rates. Ultimately, the Washington Commission authorized a $29.5 million (or 1.6 percent) increase for electric rates and a $36.5 million (or 4.0 percent) increase for natural gas rates. However, the Washington Commission also ordered PSE to file revised tariff sheets reflecting an approved extension of the amortization period for certain regulatory assets to effectively only increase the electric rates by 0.05 percent and the natural gas rates by 0.15 percent.

The Washington Commission used a set of cost-saving measures to limit increases in PSE’s rates while authorizing additional support for the company’s most vulnerable customers. These efforts provide relief to PSE’s ratepayers during the ongoing COVID-19 pandemic by extending amortization periods, deferring certain investment costs to be considered in a future rate case, increasing the company’s Home Energy Lifeline Program (HELP) funding by twice the amount of the base rate increase, and ordering PSE to work with their Low-Income Advisory Group to develop a disconnection reduction plan, and also to speed up the return of federal tax savings.

Several parties intervened in the general rate case, including the NW Energy Coalition (NWEC). During the proceeding, NWEC proposed implementing an on-bill repayment program to increase energy efficiency for PSE customers, and reverting to PSE’s previous method for calculating gas line extensions. The Washington Commission did not adopt either proposal but left room for further discussion in subsequent proceedings.

The features of NWEC’s proposed on-bill repayment program included allowing the inclusion of any technology that produces reliable, calculable savings and projected annual savings greater than the service charge, ensuring customers do not need to make payments for while upgrades are being repaired, and limiting the repayment period for upgrades to the expected life of the upgrade. NWEC argued that such a program would significantly increase the number of utility customers participating in energy efficiency programs by removing existing barriers tied to the upfront cost of energy efficiency programs. The Washington Commission concluded that requiring PSE to implement this program was premature due to PSE’s preliminary findings that it was not cost-effective or advantageous for customers.

Regarding the natural gas extension line issue, NWEC argued that PSE’s current approach, the Perpetual Net Present Value (PNPV) methodology, was based on economic assumptions that increased customer risk due to subsidization. It also argued that PSE’s old method for calculating line extension allowances (the Facilities Investment Analysis) reduced the risk of existing gas customers from subsidizing new gas customers by being more conservative in predicting the revenue received from new customers. Lastly, NWEC argued that the PNPV methodology was never fully evaluated before becoming PSE’s permanent methodology. The Washington Commission also declined this proposal, explaining that the PNPV methodology was adopted through a collaborative process. However, the Washington Commission expressed a willingness to consider any proposed changes to the methodology in another public process separate from the general rate case.

Sanger Law represented NWEC in the general rate case proceeding. NWEC leads an alliance of members with energy interests in designing, promoting, and implementing clean, affordable, and equitable energy policies grounded in analytical expertise.

These materials are intended to as informational and are not to be considered legal advice or legal opinion, nor do they create a lawyer-client relationship. Information included about previous case results does not assure a similar future result.