September 16, 2008 in Idaho

Avista trims request for gas rate increase

Wholesale price drop trickles down to customers
By The Spokesman-Review
 

Inside

Oil prices closed below $100 a barrel for the first time in six months/A4

In a day filled with dire economic news, Avista Corp. delivered a bit of cheer to its natural gas customers Monday afternoon.

Gas bills won’t go up by 20 percent, as previously anticipated. Instead, the utility asked for a 1 percent increase for its Washington customers in Monday’s filings with the state Utilities and Transportation Commission. In Idaho, Avista trimmed its request to 4 percent from 14 percent.

The filings reflect a sharp drop in wholesale gas rates. In early July, the cost of natural gas peaked at $13.32 per dekatherm, but fell to $8.34 by the end of August.

“The market has just tumbled,” said Debbie Simock, Avista spokeswoman. “Natural gas prices align with crude oil prices, which also have declined. We think it’s the overall state of the economy. People are looking to conserve, and since natural gas is a commodity, prices reflect that.”

The arrival of hurricane season – which often causes wholesale costs for natural gas to inflate – hasn’t had its customary effect, either. Prices continued to drop even as Hurricanes Gustav and Ike hit, Simock said.

Two months ago, however, Avista officials feared they could be looking at double-digit increases. On July 2, the utility took the unprecedented step of alerting customers that a spike in their gas bills could be on the way.

“We thought it was very prudent to let people know so they could manage their energy bills this winter,” Simock said.

The average Washington household uses about seven dekatherms, or 70 therms, of natural gas each month. Idaho households use about 65 therms.

If Avista’s proposed natural gas cost adjustments are approved by state regulators, the typical Washington customer would pay an extra 67 cents on their monthly gas bill, for a total $85.83, by Nov. 1.

In Idaho, a typical customer would pay an additional $2.96 per month, for a total of $78.10, by Oct 1.

Wholesale costs for gas account for 75 percent of a consumer’s natural gas bill, with the rest representing Avista’s transmission and administrative costs. The utility is asking state regulators for permission to pass those higher wholesale costs on to customers.

The requests filed Monday are separate from a general rate increase, for which Avista filed the paperwork earlier this year. The company is asking for an increase in overall electric and natural gas rates. That request is pending before public utility commissions in both states.

Contact Becky Kramer at (208)765-7122 or beckyk@spokesman.com.


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