Washington UTC approves conditional settlement agreement for Cascade Natural Gas

Published on August 25, 2022 by Dave Kovaleski

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The Washington Utilities and Transportation Commission conditionally approved a settlement agreement for Cascade Natural Gas, authorizing a $7.2 million revenue increase for the company.

The 5.81 percent increase is significantly lower than the company’s original request of 11.1 percent, or $13.7 million. It is also lower than the settlement’s terms, which would have allowed a revenue increase of $10.7 million. They found that the settlement agreement as proposed was not fair, just, reasonable, equitable, and sufficient. As a result, the Commission reduced the revenue requirement and required conditions to address concerns around capital structure and equity, among others.

With the increase, the typical residential natural gas customer using 54 therms a month will pay $1.51 more for an average monthly bill of $55.59.

The Commission imposed several conditions on its approval, including updating Cascade’s capital structure from an equal split to 47 percent equity and 53 percent long-term debt to reflect company debt changes, resulting in an authorized 6.85 percent rate of return.

Additionally, because recent state law requires the Commission to consider equity when evaluating public interest, it addressed how it will consider equity in its public interest analysis. This is so that “the Commission’s decisions do not continue to contribute to ongoing systemic harms, we must apply an equity lens in all public interest considerations. Recognizing that no action is equity-neutral, regulated companies should inquire whether each proposed modification to their rates, practices, or operations corrects or perpetuates inequities.”

In this case, the Commission found that the settlement did not address the impacts that this revenue increase would have on low-income customers. Thus, the Commission approved portions of the settlement and added requirements that Cascade must make changes to its Washington Energy Assistance Fund program to reach more customers needing bill assistance. This includes changes in income eligibility, reviewing funding levels, and establishing a customer outreach program to better connect customers with available assistance.

Further, the Commission said that when requesting future changes to customer rates, Cascade must submit customer bill impacts that show both the percentage increase to rates by customer type and the dollar amount per month for the average residential customer.

The settling parties have seven days to accept or reject the Commission’s conditions to the settlement. If they accept the conditions, the change in customer rates approved in the order will go into effect on Sept. 1.