PSE recently issued a press release about filing a rate plan increase for 2027-2029 with the Utilities and Transportation Commission (UTC).
- They are requesting that their rates increase by 30% over the next three years, on top of about 40% cumulative increase over the previous three years.
- Additionally, a once-insignificant line item called a Power Cost Adjustment (PCA) has increased over 13-fold or 1,243%, from .2¢/kWh to 3.87 ¢/kWh.
- PSE defines a PCA as follows “reflects changes in power cost due to a variety of factors, including fluctuating costs of electricity in the wholesale market and costs of new electric generation”.
- To put ~4 ¢/kWh into context, residential rates are currently 14.5 ¢/kWh or 16.4 ¢/kWh depending on the tier.
This rate plan increase is ultimately decided by the UTC, a process that could take 11 months. All told, this could mean over a 100% increase in PSE residential electric bills in the period between 2023 and 2029.
The Rationale
This is bad news from an equity standpoint and PSE offers income qualified assistance. That being said, this is good news for distributed solar: we offer homeowners a chance to hedge against rate increases like this and ultimately hedge against global geopolitical turmoil. Interestingly, part of the rationale for requesting such a dramatic rate increase is investment into utility scale solar projects across Washington and Montana to satisfy a state mandate to provide 80% of their power from non- carbon emitting resources by 2033. Additionally, PSE must invest generally in maintaining and updating a grid increasingly under strain from load growth and extreme weather events. Ultimately PSE is tasked with keeping service reliable, upgrading aging infrastructure, preparing for higher electric demand, and investing in cleaner energy sources while mitigating the impacts to their more vulnerable customers.
Big Picture
Increasing electric rates in part due to investment in large, centralized solar projects, and auxiliary sources of power that will assist the grid when the sun isn’t shining (or the wind isn’t blowing) is interesting in the context of impending changes to the net metering rate, which will very likely reduce the value of rooftop solar.
Finally, global turmoil in both oil and gas highlights the intrinsic value of both electrification and locally generated electricity from the sun.