August 2015 (1)
June 2015 (1)
May 2015 (1)
February 2015 (1)
January 2015 (1)
November 2014 (2)
October 2014 (2)
September 2014 (6)
August 2014 (1)
July 2014 (5)
June 2014 (1)
March 2014 (3)
February 2014 (2)
January 2014 (1)
November 2013 (3)
October 2013 (1)
August 2013 (3)
July 2013 (4)
May 2013 (4)
April 2013 (3)
March 2013 (2)
February 2013 (3)
January 2013 (4)
December 2012 (6)
November 2012 (9)
October 2012 (10)
September 2012 (9)
August 2012 (14)
July 2012 (17)
June 2012 (14)
May 2012 (13)
April 2012 (18)
March 2012 (14)
February 2012 (10)
January 2012 (12)
December 2011 (8)
November 2011 (11)
October 2011 (10)
September 2011 (13)
August 2011 (10)
July 2011 (6)
June 2011 (12)
May 2011 (8)
April 2011 (8)
March 2011 (9)
February 2011 (6)
January 2011 (9)
December 2010 (8)
November 2010 (17)
October 2010 (8)
September 2010 (12)
August 2010 (15)
July 2010 (10)
June 2010 (15)
May 2010 (9)
April 2010 (11)
March 2010 (13)
February 2010 (10)
January 2010 (14)
December 2009 (14)
November 2009 (10)
October 2009 (17)
September 2009 (20)
August 2009 (18)
July 2009 (22)
June 2009 (12)
Answering Questions
Avista Utilities
Clark Fork
Community Service
Customer Service
Energy Assistance
Energy Efficiency
Environment Facts
Hydro power
Infrastructure upgrades
Lake Coeur d'Alene
Natural Gas
Power Outages
Reliability Facts
Renewable Energy
Renewable Facts
Smart Grid
Spokane River

Natural Gas Pricing 101, Part 3: natural gas delivery and your bill   

Tags: Avista Utilities, Natural Gas, Rates

It takes a village to get natural gas delivered to your home safely, reliably and affordably

In our previous articles, Natural Gas Pricing 101, Part 1 and Part 2, we explained that more than half of a customer's monthly natural gas bill is the cost of the natural gas we purchase on the wholesale natural gas market and the transportation costs to get that natural gas to our system. The remaining portion of the bill, about 45 percent – or 45 cents of every dollar a customer pays for natural gas – covers our costs of delivering natural gas to a home or business.

Click to enlarge
If you’re a Washington natural gas customer, your
rates are at levels similar to those from 2003. (click
on image above and below to enlarge)
Click to enlarge
Did you know our customers are paying less today for natural gas than they were 10 years ago when you adjust for inflation? This is mostly because of the declining prices of natural gas on the wholesale market. As the chart shows, if you’re a Washington natural gas customer, your rates are at levels similar to those from 2003. When adjusted for inflation, natural gas rates in both Idaho and Washington have stayed fairly level over the past 50 years.
How do rising delivery costs impact your natural gas bill?
Avista takes the responsibility of maintaining and updating our natural gas delivery system seriously. We have an obligation to serve every customer who requests service and to comply with state and federal requirements. Safety and reliability are paramount to our operations.
Just like upgrading or replacing items in your own home, when we replace or upgrade older equipment, the cost of that equipment is many times more expensive than when it was originally installed. Capital investments like these, which are required to ensure the ongoing delivery of natural gas, along with rising operations and maintenance costs, continue to drive the need for increased rates. For instance, we’re working to replace miles of natural gas pipeline that has reached the end of its service life. The six-month, $3 million project in Davenport, Wash. is just one example of our commitment to maintain and upgrade our natural gas pipeline.

We file requests to recover these costs through our general rate cases, like the one we made to the Washington State Utilities and Transportation Commission in April of 2012. State regulators provide Avista the opportunity to earn a fair return, or profit, on the investment our shareholders have made in the facilities used to provide service to customers. The key word there is “fair,” and here’s how it works: When our costs change, Avista files a request with the state regulatory commission for a rate change. The commission scrutinizes every detail of our costs, reviews volumes of data and takes public testimony. Based on its investigation, the commission sets 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, and enabling us to continue delivering safe, reliable energy.

In our last article, we mentioned Purchased Gas Adjustment (PGA) filings. PGA filings are usually separate from general rate requests, and there are times when one of our state commissions may be reviewing a PGA request to decrease rates based on wholesale natural gas costs, while at the same time reviewing a general rate request to increase rates based on rising capital costs. Since we serve electric and natural gas customers in three different states it can be confusing for our customers to keep track of rate filings and rate changes. But as a regulated, investor-owned utility, we have to comply with the regulations set by the utility commissions in the three states where we serve customers, and we can’t increase or decrease rates without receiving approval from the commissions.

Here’s the bottom line: while the wholesale price of natural gas has declined over the past few years, the cost of delivering that natural gas continues to rise, and natural gas rates include both of these costs. Avista works hard to manage costs, improve efficiency and productivity, and be smart about how we purchase natural gas. We take pride in maintaining a system that keeps natural gas safe, reliable and as low-cost as possible.

This wraps up our three-part “Natural Gas 101” series. We’d love to hear your comments and questions. Please direct them to Communications Manager, Anna Scarlett. Read our previous articles at the links below.
Read the series
Natural Gas Pricing 101, Part 1: Wholesale Prices
Natural Gas Pricing 101, Part 2: Natural gas supply and your bill
Natural Gas Pricing 101, Part 3: Natural gas delivery and your bill
Posted by  System Account  on  8/16/2012
0  Comments  | 0  Links to this post | Bookmark this post with:          


Add a Comment

We encourage comments on this blog, but this is a family friendly conversation, so please check out our discussion guidelines so we’re all on the same page. By submitting a comment, you agree to these terms and our Privacy Policy.  

Customers must have a My Account and be logged in to comment.
Login to My Account | Create My Account


We're hopeful that this space will encourage thought provoking and informative community discussions about issues related to our products and services. Currently you must be an Avista customer to participate in the conversation, but stay tuned. In the coming weeks we'll also provide an opportunity for non-customers to participate in this forum.