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What’s happening with Natural Gas?

Did you know that currently about 25 percent of your monthly natural gas bill covers our fixed costs for delivering natural gas to your home or business? The remaining about 75 percent of your bill is the cost of the natural gas, which we purchase on the wholesale natural gas market to deliver to you. We pass through those costs directly to customers without mark up. In 2009, we were able to reduce natural gas rates for our customers in both Washington and Idaho by 30 percent because of the decline in wholesale natural gas prices.

Jackson Prarie Aerial
Avista is a co-owner of the Jackson Prairie underground natural gas storage facility located in Chehalis, Wash. 

One of our strategies to help mitigate the volatility of wholesale natural gas prices for our customers is to purchase and store natural gas in the Jackson Prairie natural gas storage facility located in Chehalis, Wash., in which Avista is a co-owner. 

This underground storage facility allows us to purchase natural gas during the non-winter months when prices are generally lower, and withdraw the gas to serve customers during the winter when market prices are higher. 

We have acquired additional storage capacity at Jackson Prairie that will allow us to purchase more lower-priced gas to serve our customers. That's one of the reasons we have filed requests with the Washington Utilities and Transportation Commission (WUTC) and the Idaho Public Utility Commission (IPUC) to increase natural gas prices for customers in both states. 

The utility commissions in both states will scrutinize every detail of our costs, review volumes of data and take public testimony.

Based on its investigation, the commissions will then set rates it believes serve the public interest – rates that are reasonable and fair for customers, while allowing Avista the opportunity to be a viable, healthy business and earn a fair return for shareholders. That’s important so we can continue delivering safe, reliable energy. The WUTC has up to 11 months and the IPUC has up to seven months to review and issue their respective decisions on our request.

Washington

If approved by the WUTC, the requested increase:

  • is for an overall 6 percent increase,
  • would produce $8.5 million, or 6.0 percent, increase in additional billed revenue for natural gas service,
  • is based on a proposed rate of return on rate base of 8.33 percent, with a common equity ratio of 48.39 percent and a 10.9 percent return on equity in combination, and
  • would increase the bill for a residential customer using an average of 69 therms a month by $4.00, or 6.8 percent, for a revised monthly bill of $62.79.

Idaho

UPDATE: If the settlement agreement is approved by the IPUC:

  • Natural gas rates would increase by 2.6 percent
  • Produce an additional 1.85 million in revenue for natural gas service
  • A portion of the temporary $17.5 million credit would be applied to customer bills, reducing the increase for one year to 1.9 percent
  • The bill for a residential customer using an average of 65 therms would increase by $1.71 for a revised monthly bill of $59.40, effective October 1, 2010