Utility says 9.4 percent increase will not boost profit margin
Avista wants to charge 9.4 percent more for natural gas this winter, which would drive up heating bills for 150,000 customers in Spokane and other parts of Eastern Washington.
The Spokane-based utility blames rising wholesale prices after last year’s relatively cheap heating season. Natural gas prices were at record lows in 2012.
Avista filed the proposed rate hike late last week with the Washington Utilities and Transportation Commission, asking for the new rate to take effect Nov. 1. The request follows a similar proposed hike for the company’s Idaho gas customers.
After dropping to 10-year lows in 2012, natural gas prices began climbing this year, said Steve Harper, Avista’s director of gas supply.
A late cold snap in March on the East Coast drew down underground storage supplies of natural gas, which were relatively untapped during the previous year’s mild winter, Harper said.
The national supply-and-demand outlook for natural gas influences what Avista pays for the commodity, even though its suppliers are in Alberta and the Rocky Mountains, he said.
Avista is one of two Washington utilities that asked to increase customers’ gas rates as a result of higher wholesale prices. Other utilities are expected to follow suit, according to the state Utilities and Transportation Commission staff. Sept. 30 is the deadline for filing for rate adjustments based on changes in wholesale gas prices.
Even though wholesale gas prices are rising, they remain relatively low, said E.J. Keating, a UTC regulatory analyst.
“Last year was an anomaly,” he said, caused by record production and a mild winter that led to surplus supplies of natural gas.
If Washington regulators approve Avista’s request for higher rates, a residential customer using an average of 68 therms of natural gas monthly would see a $5.44 increase in their monthly bill, which would rise to $63.07.
The wholesale cost of natural gas makes up about 55 percent of a customer’s bill. Company officials said Avista is asking for the higher wholesale costs to be passed along to customers, and the utility’s profit margin wouldn’t increase if the rate hike is approved.
In addition to the natural gas hike, Avista is also asking for a 2.1 percent increase in electric rates for residential and small-farm customers in Washington.
Officials said the electric rate request is prompted by smaller credits available this year through the Bonneville Power Administration’s residential exchange program. The program provides a share of the benefits from federal dams on the Columbia and Snake rivers to customers of investor-owned utilities, which appears as a credit on customers’ monthly bill.
If the electric rate request is approved by state regulators, Washington customers using an average of 989 kilowatt hours per month would see their bills increase by $1.67 monthly, to $81.35.