As of Friday, October 20, 2017
OLYMPIA Pacific Power is allowed to recover costs from customers who choose to disconnect permanently from the company’s electricity services, state regulators have decided.
The Utilities and Transportation Commission issued an order that found the eastern Washington utility made a legitimate argument to recover costs when customers disconnect permanently from its system,
But it rejected the company’s proposed methods for recovering those costs. The commission instead ordered Pacific Power to calculate the costs of stranded equipment and facilities on a case-by-case basis rather than using a set formula.
Utilities make investments in equipment and facilities such as wires and meters for each customer served, the commission said. When a customer disconnects permanently from that system, the costs of those investments pass to the utility’s remaining customers.
Usually, those costs are minimal, because disconnecting customers are replaced by subsequent owners or tenants.
When a large commercial or industrial customer disconnects to be served by a different utility, however, the commission found greater potential for shifting significant costs to other customers.
The order gives disconnecting customers the option to pay to remove impacted facilities or purchase those facilities from Pacific Power.
If a customer chooses to purchase the facilities, the company may not collect more than the amount necessary to recover its investment in those facilities.
Pacific Power has 30 days to file with the UTC a revised tariff based on the commission’s order.
Until 1999, Pacific Power, which serves 129,000 residents in Yakima, Walla Walla, and Columbia counties, had an informal service territory agreement with the Columbia Rural Electric Association, a member-owned electricity cooperative.
Although Washington does not have a specific law granting exclusive service territories to electric utilities, state law favors service territory agreements between utilities to avoid costly duplication of infrastructure and services.
According to Pacific Power, in 1999 customers began requesting to disconnect permanently from the company’s system in favor of Columbia. To date, 68 customers have switched services from Pacific Power to Columbia.
The UTC regulates the private, investor-owned electric and natural gas utilities in Washington. It is the commission’s responsibility to ensure regulated companies provide safe and reliable service to customers at reasonable rates, while allowing them the opportunity to earn a fair profit.