State regulators Tuesday approved a multi-year rate plan for Puget Sound Energy (PSE) that will raise electric and gas rates beginning July 1, but limit increases for the next three to four years.

In approving the multi-year rate plan, the Washington Utilities and Transportation Commission (UTC) will allow PSE to increase residential electric customers’ rates by 3.34 percent this year, while natural gas rates will change by 1.55 percent. The newly approved rates will produce $52.3 million of additional revenues for PSE’s electric operations and $9.1 million for its natural gas operations.

During the next three to four years, the company may increase rates a maximum of 3 percent of PSE’s annual revenue with any excess amounts above the 3 percent recovered in the following year. These increases are expected to be substantially below the level the company has received over the past several years. Among the purposes of the multi-year rate plan is to provide the company with incentives to cut costs. Ultimately, those efficiencies will benefit the consumers.

For the first year, the average PSE residential electric customer using 1,000 kilowatt hours-per-month will see their electric bill increase by $3.24, for a bill total of $100.33. The typical natural gas customer using 68 therms a month would pay $1.28 more, for a revised bill of $77.89.

The commission’s order is significant because it establishes a mechanism called “decoupling” under which utility profits are “decoupled” from sales. Therefore, the utility’s recovery of fixed costs will not depend on the volume of its gas and electricity sales, according to PSE officials. Instead, revenue is determined on a per-customer basis, thereby removing the company’s financial disincentive to invest in conservation and energy efficiency. The commission received 215 public comments on PSE’s rate-increase proposal: 201 opposed, 3 in favor and 11 undecided.

Bellevue-based Puget Sound Energy serves 1.1 million electric customers and 760,000 natural gas customers in parts of Snohomish, King, Pierce, Lewis, Thurston and Kittitas counties.

The UTC is the state agency in charge of regulating the private, investor-owned electric companies in Washington. It is the commission’s responsibility to ensure regulated companies provide safe and reliable service to customers at reasonable rates, while allowing them the opportunity to earn a fair profit.