PacifiCorp and state regulators have agreed to a $65 million rate increase that could hit Utah customers in the pocketbook starting April 1, 2004.

The settlement — which represents a 7 percent increase in revenues for the company — is roughly half of the $125 million PacifiCorp initially asked for earlier this year.

The rate hike is necessary to meet rising employee pension and insurance costs and to pay capital costs related to Utah's growing demand for electricity, the company has said.

Just how the $65 million will be spread among the company's residential, commercial and industrial customers has yet to be determined, so the company cannot say how much the average customer's bill will increase. Cost-of-service studies are expected to resolve how the rate hike will be divided.

The settlement was reached by PacifiCorp and the state's Division of Public Utilities and Committee of Consumer Services. It must still receive the blessing of the Utah Public Service Commission, which will discuss the matter at a Wednesday hearing.

"It's a reasonable and fair increase based on the audit that we performed," said Dan Gimble, chief of the technical staff for the consumer committee. "We do believe the company is focused on their core utility business, and they are stepping up their investment in generation resources."

Terms of the stipulation provide PacifiCorp with an authorized rate of return on common equity of 10.7 percent.

Dave Eskelsen, a PacifiCorp spokesman, said the $65 million settlement is a good result for the company.

"It provides some certainty," Eskelsen said. "It resolves the issues of what the company's revenue requirement is going to be without the need for lengthy hearings on the matter. So that does significantly streamline the case."

Gimble said PacifiCorp is investing a significant amount of money in its distribution system along the Wasatch Front. The company, he said, also is increasing investment in generation, namely through the Gatsby peaker addition and the contract for power from a West Valley plant.

PacifiCorp operates as Utah Power in Utah and Idaho and has about 690,000 customers in Utah.