WASHINGTON — Puget Sound Energy (PSE) customers could be paying a significant amount more for electricity.
The company is proposing an increase that would add an average of more than $600 each year for its 1.2 million customers.
The company told KIRO 7 News that it’s to meet renewable energy requirements, but we found a decent portion of the increase is going to investors instead.
The proposal comes on the heels of back-to-back years of increases. This year alone, PSE added an 18.85% hike to bills.
The proposal
PSE is asking the Washington Utility and Transportation Commission (WUTC) to approve three more years of increases:
- 16.75%
- 3.76%
- 8.91%
By the year 2029, this would add an average of $600 per year to a typical customer’s bill, according to figures from the utility.
“We are looking at double-digit increases year over year. I have not seen that in my career at all,” Tyler Pepple, an attorney representing the Alliance of Western Energy Consumers, told KIRO 7 News. “So this is definitely a different era that we are in right now.”
Why an increase?
The Northwest Power and Conservation Council expects electricity demand to double or potentially triple over the next 20 years in the Pacific Northwest. Why? There are a number of factors, including the electrification of sectors like transportation and demand from the tech sector.
Environmental regulations and an aging infrastructure are also adding to the cost.
“A lot of the infrastructure that we have here in the Pacific Northwest was built decades ago, and now we’re seeing that need to be replaced so that we can remain safe and reliable,” said Brian Rybari. He is the chair of the WUTC and one of three commissioners weighing whether to approve the increase.
Puget Sound Energy points to environmental regulations to cut carbon emissions and tax incentives rolled back by the U.S. Congress and President as potential drivers.
“We know that our customers are struggling with everyday costs. Washington’s ambitious clean energy laws, however, come at a significant expense, made worse by substantial increases in construction, equipment and energy delivery costs, challenges in permitting, and changes to the federal tax code,” the company said in a statement sent to KIRO 7 News.
How are investors benefiting?
Stephanie Chase, a research and communications manager with the Energy Policy Institute, said PSE’s investor returns are higher than the national average. She points to Seattle City Light, which has similar regulations to contend with. The publicly-owned utility did pass rate increases, though Chase says there’s a big difference between SCL and PSE.
PSE is what’s known as an investor-owned utility.
It’s owned by Puget Holdings, which is owned by several pension-management investment firms:
- Ontario Teachers’ Pension Plan Board
- Macquarie Washington Clean Energy Investment L.P.
- Alberta Investment Management Corporation
- British Columbia Investment Management Corporation
- Ontario Municipal Employees Retirement System Administration Corporation
- PGGM Vermogensbeheer B.V.
In its filing, PSE asks to raise its returns to shareholders from 9.9% to 10.8%.
PSE CEO Mary Kipp described each as “private equity entities” in a podcast interview with Nathaniel Bullard on his podcast Nameplate with Nat Bullard.
Tyler Pepple, an attorney representing the Alliance of Western Energy Consumers, said investors in PSE have less flexibility in selling shares when compared to typical stock markets. He believes it’s likely that PSE is feeling pressure from its investors, even as he says utilities are seen as one of the most stable investments. He points to PSE’s recent report that investors made around 7.5% in returns.
“Investors obviously want to maximize their return as much as possible,” Pepple said. “That still is quite a nice return if you are an investor in an enterprise like Puget Sound Energy.”
Previous reporting on the increase proposal
KIRO 7 was the first to report on the proposal to increase the return on equity in April, after PSE first filed. Since then, Washington Attorney Nick Brown has taken issue, directing his Office of Public Counsel to challenge the proposal to the WUTC.
“We’re not talking about money just to cover their expenses. We’re talking about the money on top of their expenses that goes back to their investors, their private equity companies that invest in these utilities,” Brown said. “We’re not saying don’t make any money; we’re saying make a more reasonable amount of money.”
KIRO 7 asked if that would restrict investment into PSE’s system and Washington state.
“It’s a good talking point, but really we want to rely on data to confirm that, and everything that we’ve looked at within our public council division doesn’t back that up,” answered Brown.
What’s next?
Brian Rybarik, the chair of the WUTC, said PSE cannot comment on specific rate filings.
He sat through hours of testimony on two nights, hearing from hundreds of people on how rising power bills are squeezing their budgets.
“Finding that balance is really hard,” he said. “I can’t comment on any specific cases, but I do think when we look at the balance of all of the information, utility returns on equity, and what is going on to make sure that there is an investment opportunity here in the state of Washington, we’re going to look at both sides of that equation.”
The commission will make its final decision in late January.
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