Washington Natural Gas Receives Approval for Rate Settlement Agreement

Strategic Insights -

A major regulatory decision has been made regarding Washington Natural Gas's rate settlement agreement. The Washington Utilities and Transportation Commission approved the agreement, which will provide the company with additional revenue to cover increased utility non-gas costs without affecting customer rates.

Key Takeaways:

  • The rate settlement agreement provides Washington Natural Gas with $17.7 million in additional revenue, on an annual basis, to cover increased utility non-gas costs, with no changes to the original settlement agreement.
  • Customer rates will not increase, as the Commission approved two "purchased gas adjustment" filings to pass significantly reduced gas costs through to customers, totaling $46.5 million.
  • The Commission approved a special contract between Washington Natural Gas and The Boeing Co., assuring Boeing's use of the utility's sales or transportation service in all 14 of Boeing's major western Washington locations for the next 20 years.
  • The agreement raises Washington Natural Gas's return on equity to a range of 11 to 11.25 percent, with the opportunity to earn above that range by controlling the cost of service.
  • Residential customer rates will decrease by 2.6 percent, or $1.13 monthly, on the typical bill, while firm commercial and industrial customers will see an average decrease of about 10 percent, and interruptible sales and transportation customers will average a 15 percent rate decrease.
  • The company agreed not to file for further general rate relief before May 1997, except in certain limited circumstances, as part of the negotiated settlement.

Statistics:

  • $17.7 million in additional revenue to cover increased utility non-gas costs
  • $46.5 million in reduced gas costs passed through to customers
  • 2.6 percent decrease in residential customer rates
  • 10 percent average decrease in firm commercial and industrial customer rates
  • 15 percent average rate decrease in interruptible sales and transportation customer rates
  • 465,000 customers served in the central Puget Sound area of western Washington
  • 6.5 percent compound annual rate of customer growth since 1990

Sources:

  • Washington Utilities and Transportation Commission
  • Washington Energy Co.
  • The Boeing Co.
  • U.S. Securities and Exchange Commission (no specific document link)
  • Business Wire (May 11, 1995)