Natural gas rates may jump

Inland Northwest residents may pay more for heat this winter, a reflection of higher wholesale prices for natural gas.

On Friday, Avista Corp. asked Idaho regulators to approve a 14.2 percent rate hike for its natural gas customers in that state. The increase, if granted, would add $8.21 to a typical family’s monthly utility bill. The request is in addition to another increase Avista asked for earlier this year.

Avista officials will make similar requests of Washington and Oregon regulators in coming weeks.

The rate hikes won’t generate additional profit for Avista, said Catherine Markson, company spokeswoman. Customers’ utility bills will simply reflect the higher amounts Avista is paying for wholesale natural gas, she said.

Last winter, Avista paid 45 to 50 cents for each therm of natural gas used by its customers. Projected costs for the coming winter are 60 cents per therm. A typical residential customer or small business uses 70 therms of natural gas each month.

Natural gas prices are rising for several reasons, said Bob Gruber, Avista’s manager of natural gas resources.

“They tend to follow the world price of oil,” he said. With crude oil spiking at more than $42 per barrel this summer, natural gas prices shot up, too.

Prices of the two commodities are related, because some large energy users, such as factories, switch to natural gas when oil prices rise, Gruber said. As demand for natural gas heats up, prices increase.

Avista also faces additional competition for natural gas coming out of Alberta and British Columbia, which accounts for about 75 percent of the utility’s supply, Gruber said. New pipeline capacity makes it easier to ship that natural gas to densely populated communities in the upper Midwest.

“Now we compete with Chicago and even the eastern U.S. for that gas,” he said. “It’s more of a national market.”

Price adjustments are an annual process for Avista. The utility asks regulators in three states for permission to adjust rates upward or downward, depending on what’s happening with wholesale natural gas prices. Markson said Avista is still calculating rate requests for Washington and Oregon.

Regulators scrutinize Avista’s requests before making a decision.

“Our goal is to make sure that those are prudent purchases, that they are finding the lowest cost gas available on the market,” said Gene Fadness, spokesman for the Idaho Public Utilities Commission in Boise.

IPUC will seek written comments on the proposed 14.2 percent increase. Avista has asked the commission to make a decision by Sept. 9.

In Idaho, regulators are also reviewing a general rate increase filed by Avista in February. Avista has asked for permission to raise gas and electric bills to recover higher company operating costs and the costs of adding new power generation. It’s the company’s first such request in 14 years.

IPUC is in the midst of a six-month review of that Avista request, Fadness said. The review includes an extensive audit of the company’s operating costs, including items such as salaries, pensions and the cost of transporting electricity.

Avista is asking for a natural gas rate hike of 8.6 percent for residential customers in Idaho. For residential electric customers, the rate hike request is 11 percent.

If both gas price increases are granted, the typical residential customer’s gas bill would rise from $57.68 per month to $70.68 per month, Markson said. If the electric hike is approved, the typical residential user’s electric bill would increase from $60.15 to $65.09 per month.

Nearly 1,300 Silver Valley residents signed a petition this spring protesting the general rate increase.

More than 11,000 of Avista’s Idaho customers have household incomes of less than $9,000, Teri Ottens, executive director of the Community Action Partnership of Idaho, noted in written comments to the IPUC. Those households pay the highest percentage of their income for energy costs, Ottens said. She encouraged Avista to increase the money it devotes to weatherizing homes for low-income people, which currently pays for weatherizing about 21 homes per year. Avista serves 62,000 customers in Idaho.

IPUC has scheduled hearings in Kellogg and Sandpoint on Monday to take comments on the general rate increase. The Kellogg hearing begins at 1 p.m. at the Job Service office, 35 Wildcat Way. The Sandpoint hearing begins at 7 p.m. at the Edgewater Resort, 56 Bridge St.