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Avista warns to expect bigger gas bills

Thu., July 3, 2008

Avista Utilities warned consumers Wednesday that the pain they’re suffering at the pumps could spread to their parlors next winter.

Although the Spokane utility will not file rate-increase applications with Washington, Idaho and Oregon regulators until fall, spokeswoman Debbie Simock said rising wholesale natural gas costs will likely translate into percentage increases in the double digits after two years of relative stability.

Higher gas costs will probably affect electricity bills as well.

Simock said Avista decided to warn customers of potential gas rate increases early so they can consider how they might limit their use of gas to heat space and water in the months ahead.

The company issued a chart that shows how the climb in wholesale gas prices since October parallels the cost increase for gasoline.

By June, said Kevin Christie, Avista’s gas supply director, a dekatherm of natural gas cost $12.81, up 73 percent from $7.39 in June 2007.

The average Washington household uses about seven dekatherms, or 70 therms, of natural gas each month. Idaho households use slightly less.

Gas costs constitute about 80 percent of a consumer’s natural gas bill, with the remainder representing transmission and administrative expenses.

Christie said Avista has purchased about one-half the gas that customers will use this winter. Some was purchased as long as three years ago and some this spring, the season when prices typically soften. That did not happen this year, he said.

How large a rate increase the company will seek depends in part on the direction of prices going into September and beyond, when the company takes delivery of gas purchased at prices indexed to daily or monthly market prices, Christie said.

Regulators will judge whether Avista and other gas utilities in the region have been prudent buyers of gas, he said, but none of the company’s actions should be a surprise. “Nothing we provide them in the filing in the fall will be new,” Christie said.

Marilyn Meehan, spokeswoman for the Washington Utilities and Transportation Commission, said only Avista has raised a red flag on rates, but the state’s other three gas utilities are looking at rate increases.

“The question is, ‘How much is it going to go up?’ ” she said.

Although the Avista alert does not address power rates, Christie said higher gas prices will likely filter into Avista electricity bills because 26 percent of the power sold to consumers is generated by gas-fired turbines.

Simock said Avista does not earn a profit on the commodity, only on pipelines and other equipment to deliver the gas, and administration costs.

Natural gas bills have been volatile since 2001 but declined slightly the past two years in Idaho. Washington rates decreased almost 6 percent in 2007 but have climbed 1.77 percent since Jan. 1.

“It’s still the desired fuel choice of homes,” Simock said, and Avista continues to offer rebates to homeowners who replace electric furnaces or water heaters with natural gas equipment.

Burning gas for home heating is twice as efficient as burning gas to generate electricity, she said.

The recent rate respite did little to ease the pressure on the area’s low-income residents, said Robin Waller, spokeswoman for Spokane Neighborhood Action Programs.

SNAP helped more than 9,000 households with their heating bills last winter, she said, but many still reported turning their furnaces off early.

“It’s not just affecting the poor,” Waller said. “Now, it’s cutting into the middle class.”

Looking ahead to the winter, and noting that gas futures closed Wednesday at $13.40 per dekatherm, she said, “It’s going to be scary.”


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