Wwp Seeks Pricing Change Natural Gas Cost Method Could Save Customers Some Money

Washington Water Power Co. has asked Idaho and Washington regulators to approve a new mechanism for setting natural gas prices that could save consumers in the two states about $1.7 million.

Regulatory Policy Analyst Kelly Norwood said the plan would transfer responsibility for gas purchases that supply retail customers like homeowners to Avista Energy, a WWP subsidiary that already buys gas for wholesale customers.

Consolidating all purchases enables the company to manage risk better and reduce administrative overhead, he said.

“We can end up with lower gas costs,” Norwood said.

He said a benchmark price would be established using market indices for suppliers in Alberta, British Columbia, and the Rocky Mountain region.

An “adder” of six-tenths of a cent per therm would cover the premium the company must pay to obtain gas at index prices, he said.

When WWP can buy gas below the index price, which is published monthly, Norwood said, the company would pocket the savings.

But if company costs exceed the indices, it would have to absorb the losses, he said.

If the mechanism had been in place the past three years, he said, Idaho consumers would have saved $440,000, Washington consumers $1.3 million.

Total natural gas revenues in the two states are $26 million and $65 million, respectively.

Norwood said the company hopes the Idaho Public Utilities Commission and Washington Utilities and Transportation Commission approve the plan’s implementation for Feb. 1, 1999.

A similar filing will be made in Oregon, he added.