Avista seeks gas rate hikes

Within the next year, Washington customers of Avista Utilities could be paying almost $13 more per month for natural gas.

On Friday, the utility filed two requests with state regulators to raise gas rates. The first – which would hike average monthly residential bills by about 12 percent – is a direct pass-through of the higher prices the utility is paying for the commodity. The other – which would boost costs for that customer by an additional 7 percent – is a “general rate case,” linked to Avista’s increasing business expenses.

The first increase, which would add about $8 a month to the average residential customer’s bill, could take effect as early as Oct. 1. The other, which would tack on another $4.45 to that bill, likely will take up to 11 months to decide and will be subject to public hearings and more intense review by the Washington Utilities and Transportation Commission, which regulates Avista and other utilities. This request follows similar proposals in both Idaho and Oregon, the other two states Avista serves.

If both requests are approved, the average residential customer, using about 78 therms per month, could see his or her bill rise from $67.23 to about $79.74.

The price of the commodity continues to rise for a number of reasons, said Ron Peterson, Avista’s vice president of energy resources. Natural gas prices are tied to world oil prices – which recently hit $49 for a barrel of crude. Large businesses can use either oil or natural gas and tend to switch back and forth when prices rise, Peterson said.

Avista also faces additional competition for natural gas coming out of Alberta and British Columbia, which accounts for the majority of the utility’s supply. New pipelines connecting those supply basins to the Midwest and East Coast make it easier to ship that gas to more densely populated areas, Peterson said.

For the last couple of years, Avista was paying between 40 and 50 cents for a therm of natural gas. Prices for the next year or two are coming in at closer to 60 cents or higher, Peterson said.

“We’re doing our best to hedge those prices, but there isn’t a lot of opportunity to get gas, for the winter months especially, below the $6 (per decatherm) level,” Peterson said. “Demand is also increasing due to improvements in the economy.”

Avista does not profit from the higher price of gas, company spokeswoman Catherine Markson said. The price hike is a direct pass-through of the higher prices the utility is paying for the commodity.

“It’s not good for anyone for those prices to go up,” said Kelly Norwood, Avista’s vice president of state and federal regulations.

Avista does, however, stand to increase profits as a result of the general rate case, its first since December 2000. Avista is requesting that base rates be increased by about five cents per therm, due to higher costs for operations, maintenance and overhead.

The company has added 15,000 new natural gas customers since 1998 and has invested $40 million in the natural gas distribution system. Operating charges are also increasing because customers are using less natural gas, due in part to conservation, Norwood said. The company also still is struggling to regain financial health due to the energy crisis of 2000 and 2001 when energy prices skyrocketed and the company took on a lot of debt.

“There isn’t really one major over-arching issue,” Norwood said. “It’s a catch-up.”

Avista officials note that in the past two years, the company has donated $900,000 in tax credits to a rate-assistance program, along with $100,000 to community action agencies in support of energy assistance. The company also contributes $150,000 annually to Project Share, another energy assistance program.

However, John O’Rourke, director of a nonprofit consumer watchdog association, said the company’s contributions to such programs have not kept pace with rising energy costs.

“We hope Avista will use this case to make a commitment to increase its funding of conservation and low-income weatherization programs,” said O’Rourke, director of the Citizens Utility Alliance of Washington, in an e-mail. “These programs can help to shield the most vulnerable households from the devastating effects of such a major rate hike.”