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PGE's Tucannon River wind farm, a $500 million investment, under construction in southeast Washington.

(Courtesy of PGE)

Portland General Electric has agreed to slash a requested rate increase that would take place this January by 80 percent as a result of settlements with ratepayer groups and staff at the Oregon Public Utility Commission.

The company filed a rate case in February seeking an average rate increase of about 4.6 percent to start recovering the cost of its $500 million investment in a wind farm in southeastern Washington and a $300 million investment in a new natural gas fired plant in Clatskanie.

Based on negotiations with staff at the PUC and ratepayer advocates, the company has agreed to trim its revenue request to just $17 million, which would amount to about a 1 percent increase in rates.

PGE's average residential customer uses about 840 kilowatt hours of electricity a month and has a monthly bill averaging slightly less than $100 today.

The set of stipulations, which still needs to be approved by the commission, do increase PGE's required revenues by $87 million to recover its new generation investments -- about $12 million less than the company was originally seeking.

But that increase is offset $70 million in cost reductions and rate credits. The offsets include an extension of the useful life of some of the utility's assets, a reduction in its forecast power costs, a reduction in its allowed return on equity, and lower borrowing costs. Customers also benefit from a legal settlement related to the cost of storing spent fuel from its shuttered Trojan nuclear reactor.

PGE is still looking to settle a dispute over it allocation of savings from energy efficiency investments that are funded by monthly surcharges on customers' bills. Residential ratepayer advocates are looking for larger share of those benefits – and lower rates - because they fund a disproportionate share of the investments, while industrial and large commercial customers are exempt from some of the costs. Settlement talks are ongoing.

A final rate order is expected by December, at which point the company can start preparing its next filing. The company anticipates filing a rate case next year to recover costs from another big investment, a $500 million natural gas plant in Boardman. The company said it can't estimate the price impact yet because, as always, many things will go into the mix.

-- Ted Sickinger