Washington and Idaho customers of Avista Utilities could be paying $16 more per month for natural gas starting in November if state regulators approve a request the company submitted Monday.
Citing skyrocketing wholesale prices that are tied closely to the price of oil, Avista has asked that customers pay 23 percent more to cover the cost the company is paying for natural gas.
State law does not permit utilities to profit from the annual “pass-through” of prices, unlike general rate cases which affect the company’s bottom line.
Bob Gruber, Avista’s manager of natural gas resources, said he thought wholesale prices were high last year, when the company was paying more than 60 cents a therm. This winter, the company is paying about $1.10 a therm, he said. That entire increase is not reflected in customer prices because Avista is able to buy some gas ahead of time at lower prices. The average Avista customer uses about 70 therms a month.
Natural gas prices closely parallel oil prices because large businesses can use either fuel and tend to switch back and forth based on price, Gruber said. Oil prices are hovering at record levels of about $65 for a barrel of crude. The Department of Energy’s Energy Information Administration projects a national average increase of 52 percent for natural gas customers this winter, an Avista news release said.
“If it’s any consolation, while this winter looks very high … longer term we see the prices coming off some, but not a substantial amount,” Gruber said.
But it’s hard to ease the pain for some customers in Washington and Idaho, who last year saw natural gas bills go up by 16 percent and 21 percent, respectively. The pass-through of higher prices was responsible for 12 percent of the increase in Washington and 14 percent of the increase in Idaho. In addition, another small natural gas increase is pending before state regulators in Washington, as part of a general rate case.
“It’s not good news at all,” said Margaret Beloit, who runs energy assistance programs for Spokane Neighborhood Action Programs. Last year, SNAP was able to help 30 percent of qualified households with their energy bills. “We’ve noticed the last couple of years, as heating costs are going up, huge increases in requests from households over the income guidelines. If they’re one penny over that level, we can’t help them with the federal program.”
Avista officials say the company tries to help ease the burden of price increases on its low-income customers by contributing to Project Share, an energy assistance program, and offering CARES, a program that helps people who have challenges in paying their bills. In addition, the company urges people to sign up for Comfort Level Billing, a plan that averages annual energy bills into equal monthly payments.
The impact of Hurricane Katrina on energy production in the Gulf of Mexico will have an impact on natural gas prices, but Avista customers won’t feel that until next year, Gruber said. That’s because Avista buys 50 percent of its gas supply ahead of time, trying to lock in better prices. Though the company will be buying gas month-to-month at prices affected by Katrina’s devastation, those costs will not be passed along until next year, Gruber said.
Most other regulated utility companies in Washington and Idaho are making similar requests, said spokespeople for the commissions in both states. Intermountain Gas in Idaho recently asked for a 27.6 percent increase in natural gas prices to cover rising costs and Puget Sound Energy in Washington, a 15 percent increase. Northwest Natural Gas, also in Washington, requested a 10 percent boost.
“I want to make sure people understand that the commission is very thorough in reviewing the company’s numbers,” said Marilyn Meehan, a spokeswoman for the Washington Utilities and Transportation Commission. “But customers need to know that the company does not control the market price for gas.”