OLYMPIA. – State regulators issued formal guidance recently on how the Utilities and Transportation Commission (UTC) determines when to allow utilities to recover costs for company property in customer rates.
The UTC issued a policy statement to establish a process for determining whether utility company property, investments, or projects are “used and useful,” as required by law.
The process does not guarantee recovery of these costs but gives utilities an opportunity to begin recovering costs sooner, while still ensuring fair, just, and reasonable rates. If the commission finds the property was not used or useful, customers would be entitled to refunds.
The policy statement is available on the commission’s website. With this statement, the commission intends to achieve four goals:
- Ensure general consistency with longstanding rate-making practices, principles, and standards.
- Maintain flexibility in rate-making.
- Avoid overly prescriptive guidance.
- Support streamlined processes.
Washington state law gives the commission the power to determine the fair value of any property that is “used and useful” to public service companies providing utility services in the state. These values help to determine customer rates for services (RCW 80.04.250).
The Clean Energy Transformation Act (CETA), passed in 2019, clarified the commission’s authority to review property that will be in use after new utility rates go into effect, but is not serving customers before the rates go into effect. The law required the commission to establish a process to identify, review, and approve such property.