January 11, 2010 in News

Avista offers to drop a surcharge

By The Spokesman-Review
 
Tags:Avista

Avista Corp. plans to drop a monthly surcharge paid by its 232,000 Eastern Washington electric customers that dates to the 2001 West Coast energy crisis.

The 7 percent surcharge costs $5.35 per month for a household using an average of 1,000 kilowatt hours of electricity. In a Monday filing, the Spokane-based utility asked state regulators for permission to drop the surcharge by Feb. 12. If the Washington Utilities and Transportation Commission approves the request as expected, the average residential customer’s monthly electric bill would drop from $77.14 to $71.79.

Commercial customers would see a corresponding decrease in their monthly bills.

In 2001, energy prices soared as result of two factors: A drought that reduced the Northwest’s hydropower generation and market manipulation by Enron and other energy traders. Avista and other utilities that bought wholesale electricity on the spot market got stuck with exorbitant price hikes.

To help Avista recover its wholesale energy costs, WUTC allowed the utility to add a 25 percent surcharge to customers’ monthly electric bills, said Mike Parvinen, the WUTC’s assistant director for energy. Part of the surcharge was later rolled into the utility’s base electrical rates, but it never completely went away. Avista was allowed to continue collecting a lower surcharge through later droughts and hikes in wholesale natural gas prices, Parvinen said.

Since Avista uses gas-fired turbines to produce some of its electricity, natural gas prices also affect the cost of electricity.

Now, hydro conditions have returned to near normal and wholesale natural gas rates have dropped, said Kelly Norwood, Avista’s vice president of state and federal regulation.

“We are pleased to be able to eliminate the…surcharge and reduce rates for our customers during this heating season,” he said in a prepared statement.

The surcharge is separate from Avista’s base rates for electricity and natural gas, which went up on Jan. 1 for the utility’s Eastern Washington customers. As a result of the base rate hike, a typical household is paying about $2 more per month for electricity. Dropping the $5.35 per surcharge would lead to a net saving of nearly $3 per bill.


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