Feb 28 - McClatchy-Tribune Regional News - Ted Sickinger The Oregonian, Portland, Ore.

The benchmark price of oil isn't the only thing levitating above $100.

Portland General Electric Co. will file a request today with state utility regulators seeking an 8.9 percent increase in electricity rates starting in January 2009. If the request is approved with no changes, it could push the average monthly bill for a residential customer of the state's largest electric utility above $100 for the first time.

The Portland-based company, which serves more than 800,000 customers in the state, is projecting higher prices in 2009 for coal and natural gas and for electricity it purchases on the wholesale market. It also expects to pay more for operating costs such as labor, medical insurance and regulatory compliance.

The increase also reflects a request by the company to raise its allowed rate of return for shareholders from 10.1 percent to 10.75 percent.

The rate increase would push PGE's average price per kilowatt hour of electricity to 10.87 cents and propel the average monthly bill for a customer using 900 kilowatt hours of electricity from $92.72 to $100.93.

Those figures include low-income assistance and public purpose charges levied on all residential customers.

Since January of last year, PGE customers have seen their rates increase 6.8 percent because of increased power costs as well as investments in a new gas-fired power plant and a wind farm.

Residential rates spiked an additional 13 percent in June after the Bonneville Power Administration suspended a system of payments that decrease electricity bills for customers of private utilities. BPA might reinstate its residential exchange payments, which flow to customers of private utilities to give them some benefit from the low-cost federal hydropower generated in the region. That could cut residential rates by 5 percent to 7 percent, but the outcome is uncertain.

PGE rarely gets all that it asks for from Oregon's utility regulators. And ratepayer advocates are sure to challenge big parts of the company's rate request, which includes $146 million in increased costs overall.

"We're more than stunned with the fact that they're filing a rate case," said Lowrey Brown, an analyst with the Citizen's Utility Board. "This is a company that just isn't controlling its costs. Especially at a time when it's planning a bunch of future investments, it really needs to think about what its customers can afford."

Consumers are facing significantly higher costs at the fuel pump, the grocery store and the doctor's office, as well as a less than stellar outlook for the housing, job and stock markets.

Jim Piro, PGE's chief financial officer, said the company doesn't have control over many of the costs that are projected to drive the increase and will be updating its rate case to reflect what happens to coal and natural gas prices over coming months.

"We're as concerned as everyone else about what's happening to electricity costs," Piro said. "There are a number of things that will affect our business that we'll try to shape, but we're just one of the parties involved in the conversation."

Still, based on what PGE told financial analysts Tuesday as it released its earnings for the fourth quarter of 2007, its customers shouldn't expect much relief from the steady drumbeat of rate increases,

PGE lit up the first phase of its Biglow Canyon wind farm in Sherman County late last year and expects to spend another $700 million to $800 million by 2010 to complete that project. Wind farms reduce fuel costs, but the capital investment also increases rates. PGE says it is facing inflation in those costs because of a weak dollar as well as increased transportation and materials expenses.

PGE also expects to spend between $300 million and $620 million in coming years to control pollution from its coal-fired power plant in Boardman -- costs that will be rolled into rates.

PGE said Tuesday that its earnings more than doubled in 2007. It earned $145 million, or $2.33 per diluted share, on revenues of $1.74 billion in 2007. That compares with net income of $71 million, or $1.14 per diluted share, on revenues of $1.52 billion in 2006.

The results reflected normal operations at its Boardman power plant, which was knocked offline in late 2005 by turbine damage and remained shuttered for much of 2006 after the replacement turbine was also damaged.

The 2007 results also included $31 million, or 50 cents per diluted share, in one-time gains, such as $16 million in Boardman outage costs that regulators are allowing the company to recover from ratepayers, and $4 million due to the settlement of lawsuits related to energy trading with customers in California.

The one-time gains also include a surcharge to ratepayers under a new utility tax law. The law requires Oregon utilities to reconcile the taxes they collect from customers in rates with those they pay to units of government. PGE recorded an $18 million surcharge in 2007. Last year, it recorded a $40 million refund.

PGE released its earnings before the beginning of trading Tuesday. Its stock, traded on the New York Stock Exchange, closed at $24.50, up 93 cents.