Avista wants rate increases

Avista Corp. said it needs to charge more for electricity and natural gas to offset climbing energy prices, more homes being built in Spokane County, and upgrades to dams and power plants.

The Spokane-based utility asked state regulators Thursday to approve an 8.8 percent rate hike for electricity starting Feb. 1. The new rate would increase the average monthly electric bill by $5.80 per month, for a total of $65.96.

People using natural gas would be hit with a separate 8.1 percent increase beginning Nov. 1 that would drive up their average monthly heating bill by $6.90, for a total of $93.55.

Avista buys three-fourths of its natural gas from Canada. The rest comes from Rocky Mountain states such as New Mexico and Colorado.

No matter its origin, natural gas costs more to buy and send via pipeline, said Kelly Norwood, Avista vice president of state and federal regulation. Natural gas prices often track with crude oil prices and as of Thursday, a barrel of crude fetched more than $70, up from $45 a year ago.

Higher natural gas prices mean heating homes this winter will be more expensive.

The company hedges more than half its supply of natural gas, meaning it establishes contracts to buy the commodity in advance. The rest comes from a storage facility, long-term contracts and the spot market. Avista’s procurement strategy means the company is paying about the same as other utilities that don’t have their own natural gas supplies.

Washington Utilities and Transportation Commission spokeswoman Marilyn Meehan said Puget Sound Energy is seeking a 9 percent rate increase for its 700,000 Western Washington natural gas customers. And Northwest Natural Gas Co. hopes for a 6.4 percent increase for its Vancouver area-ratepayers.

“It’s important to note that utilities are not allowed to earn a profit on these natural gas pass-through (rate increases),” she said. “We take this very seriously.”

WUTC staff will review the past year’s natural gas prices and Avista’s procurement activities, as well as the company’s price predictions for the coming year.

As surely as natural gas rates rise when the price for the fuel is high, rates drop when the natural gas markets dip, Meehan said.

On the electricity side, Avista has asked the WUTC to let it recover money spent on natural gas to generate electricity, along with equipment upgrades and the cost of serving new customers.

Avista also wants to recover money spent rewinding generator coils and replacing turbine blades at its Cabinet Gorge Dam on the Clark Fork River. The work boosted the dam’s electricity output and were necessary upgrades to the 1950s-era hydropower projects, the company said. Avista also spent money at its coal-burning power plant near Colstrip, Mont. Avista’s share of the multicompany-owned project in Eastern Montana provides 20 percent of its total electricity supply.

The timing of these expenditures is unfortunate, acknowledged company spokeswoman Catherine Markson. Avista raised its natural gas rates nearly 24 percent last year. Electricity rates climbed about 9 percent.

But Norwood said it wouldn’t be smart business practice to shelve or delay upgrades, maintenance and future planning.

Neither request for higher rates has anything to do with salary raises or profits, according to the company.

Much of it has to do with what Avista calls “load growth,” basically delivering more electricity to more people.

The initial cost of stringing wires and securing enough electricity to serve new customers comes with costs that Avista must meet, then recover from ratepayers.

Avista also requested similar rate increases for its natural gas and electricity customers in Oregon.