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Puget Sound Energy seeks rate increase to fund energy assistance program

Puget Sound Energy is looking to increase electric and natural gas rates to help fund its low-income bill assistance program.

The utility company filed a rate increase request with the Utilities and Transportation Commission in late August. PSE asked for an overall average of 4/1,000 of 1 percent increase to customers' electric rates and 3/100 of a 1 percent increase to natural gas rates. If approved, rates will tick up beginning Oct. 1.

The request is not a general rate increase (which is requested to cover power supply costs, salaries, administrative costs and more). Instead, it is program specific, with the revenue going to fund its Home Energy Lifeline Program (HELP). The program assists low-income PSE customers with paying their utility bills.

"There's been a high volume of requests (for utility assistance) over the past year," PSE spokeswoman Dorothy Braken said.

Effects on customers

The proposed rates hikes would apply to customers in the 11 counties served by PSE. The utility company provides electricity to approximately 1 million customers. Roughly 750,000 customers are provided natural gas.

PSE estimates the new rates would reflect, on average, a 4 cent per month increase to customers' electric bills and a 3 cent per month increase to natural gas bills. A typical customer, based on a monthly use of 1,000 kilowatt hours of electricity, would pay a bill amounting to roughly $99.68 if the rate increase were approved, according to information provided by PSE. A typical natural gas customer, based on usage of 68 therms of natural gas, would pay $81.35 a month.

Payment assistance

The revenue generated by the rate increases would introduce new revenue to PSE's energy assistance program (HELP). Qualifying PSE customers may receive up to $1,000 per year in utility bill credits through the program. HELP began in 2002. Each year, more than 25,000 households in PSE's service area receive grants, Braken said. From October 2009 through July 2010, PSE awarded $11.3 million in utility payment assistance through the program. The average HELP credit amounted to $400.

Funding gap

HELP is in high demand, but the program is experiencing a $400,000 funding gap, Braken said. The gap is due mostly to administrative costs, she said. To continue offering the low-income assistance program, PSE must have enough funding to cover the program base of $15 million, as well as pay its staff and 12 community agencies, including Federal Way's Multi-Service Center, to process and reward HELP grants, she said. The number of HELP applications PSE and the community agencies are processing is increasing, Braken said. Administrative costs are rising in accordance.

"Overall, administrative costs tend to go up over time," she said.

Increased demand

Money collected from the rate increases would also be used to provide assistance to a greater number of low-income PSE customers during the upcoming winter months, Braken said. PSE expects more customers than usual will need help paying their utility bills as the cold wet weather sets in and the rough economy continues.

The Multi-Service Center has the same expectations. This past year, the MSC issued $3.3 million in HELP funds to 6,144 South King County households needing energy assistance, said Linda Purlee, MSC director of emergency services. MSC is unsure how much PSE will make available for it to distribute this year. The contract is generally awarded in October.

"The worse the economy gets, the more people need energy assistance," Purlee said.

The Utilities and Transportation Commission is scheduled to review PSE's rate change on Sept. 30. In making its decision, the commission will look at what PSE anticipated to collect from current rates vs. what it actually collected to help fund the program, said Mike Parvinen, the commission's assistant director for energy.

"Basically, we look at whether or not what they are requesting is fair, just and reasonable for all the parties," he said.

FYI

The last PSE rate increase occurred earlier this year. That was a general rate increase. The revenues collected go toward PSE's overall sustainability, rather than being directed to a specific program. The rate hike affected electric and natural gas customers. An average electric customer's monthly bill increased $2.80 and an average natural gas customer's bill went up 87 cents per month, Braken said.

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