SEATTLE, Wash. (Legal Newsline)--The Washington attorney general's office has reached an agreement with Pacific Power over its proposed rate increase.

The agreement, which has yet to be approved by the state Utilities and Transportation Commission, would allow an 8.5 percent increase to monthly residential electric bills rather than the 15 percent increase sought by Pacific Power.

Under the agreement, a typical residential customer now paying $85.11 a month would pay $92.48 a month.

Small-business customers, meanwhile, would see a 7.4 percent increase beginning in mid-October, Attorney General Rob McKenna's office said.

The attorney general's Public Counsel Section Chief Simon ffitch said the agreement is in the best interest of ratepayers.

"While any utility rate increase is a challenge to household budgets, this agreement substantially reduces the impact and eliminates some substantial problems with Pacific Power's original request," ffitch said.

The Portland, Ore.-based utility had sought an additional $37.4 million in revenues by raising rates for more than 125,000 customers in central and southeast Washington. Under the new agreement, the company would be allowed to take only $20.4 million in new revenues.

Pacific Power also asked state regulators for permission to augment power rates between formal general rate cases in order to offset increased costs from generating power or purchasing wholesale power.

"It is preferable to review PacifiCorp's cost requests in a general rate case where we can look at the whole picture of company earnings as well as costs," ffitch said.

From Legal Newsline: Reach reporter Chris Rizo at chrisrizo@legalnewsline.com.