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Avista asks to pass on its savings

Wed., Dec. 31, 2008, 11:19 a.m.

With wholesale prices for natural gas in a steady decline, Avista Corp. is paying out less for the commodity and says it will pass the savings on to utility customers.

Residential natural gas customers could see a $3 to $4 savings on a typical monthly bill.

“That’s good news, we hope,” said Jessie Wuerst, Avista spokeswoman.

The Spokane-based utility asked state regulators for permission to lower the price Avista charges its natural gas customers in Idaho and Washington by 4.7 percent and 3 percent respectively. Utility commissions in both states are expected to approve the lower prices by mid-January, Wuerst said.

Wholesale costs for gas account for 75 percent of a consumer’s natural gas bill. The remaining portion of the bill reflects Avista’s gas delivery and administrative costs.

In early July, wholesale costs for natural gas peaked at $13.32 per dekatherm, gradually dropping to Wednesday’s price of $5.26 per dekatherm.

Avista buys most of its natural gas in advance of the winter heating season, storing it until customers need it. So, even though wholesale gas prices have dropped by 60 percent from their peak, customers are still paying for some of the higher-cost gas purchased last spring and summer, Wuerst said.

Declining natural gas prices correspond with falling gasoline prices. Wuerst said a faltering national economy means less demand for the commodity, which leads to lower prices.

Each fall, Avista asks state regulators to adjust the amount the utility charges its customers for natural gas, based on fluctuations in wholesale gas prices. With Avista customers facing “challenging economic times,” the utility decided to speed up the request, Wuerst said.

Earlier this week, Avista received approval to increase base electric and natural gas rates for the utility’s Washington customers. The rate hike, which goes into effect today, is a separate action.

Base rates reflect all of Avista’s costs of doing business – including the cost of transmission lines, salaries, trucks, equipment, overhead and administrative costs, as well as wholesale natural gas prices, Wuerst said. Base rates are scrutinized by public utilities commissions in each state during complicated legal proceedings. As a result, changes to base rates can take months to approve.

When the wholesale price of natural gas rises or falls, however, Avista can ask the public utilities commission to approve “pass-through” charges or credits for customers, without going through a full rate review.

Wuerst said the utility’s action on natural gas prices will help temper the effect of the Washington rate hike.

After the rate hike, a typical Washington household will pay about $88 per month for natural gas. The natural gas credit will cut about $3 off that bill, Wuerst said.

In Idaho, a typical monthly gas bill is $78 per month. Idaho customers would see a $4 savings from lower gas prices.

The average Washington household uses about 7 dekatherms – or 70 therms – of natural gas per month, while the average Idaho household uses 65 therms.

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