SEATTLE — Puget Sound Energy is overcharging its customers by as much as $35 million a year, the state attorney general’s office says.
Attorney General Bob Ferguson claims the private utility owes more than 1 million customers a refund, The Seattle Times reported.
“Washington law requires that utility rates charged to consumers be fair, just, reasonable and sufficient,” Ferguson said in a statement. “Fair utility rates can incorporate a reasonable return for investors, but not an excessive one.”
Ferguson’s office submitted testimony on the issue to the state utilities commission, which is re-examining what PSE’s profit margin should be after the attorney general convinced a Thurston County Superior Court judge it needed to be reviewed. The commission had approved a 9.8 percent rate of return last year, the same rate PSE investors received in 2011.
The state argues that the improving economy has reduced the cost of equity capital, and because automatic rate increases under the plan reduce investors’ financial risk, PSE should not be receiving the same return on equity that it received in 2011.
The judge ruled last summer that the Washington Utilities and Transportation Commission failed to adequately study a key number that determines how much profit PSE investors can collect in the rate plan, which started in July 2013 and could extend into 2016.
The utility says not only is 9.8 percent fair, but that it could justify even higher returns.
“It was determined through our discussion and our research that it remained a fair figure,” said PSE spokesman Grant Ringel.
The expert witness for the attorney general’s office, Stephen Hill, says the number should be adjusted to 8.65 percent.
Puget Sound Energy serves customers in 10 counties, primarily in western Washington.