Jul 30 , 2012
Avista customers see benefits of natural gas abundance
You’ve probably seen the headlines: “Natural gas prices fall to 10-year low,” or “Natural gas prices continue to drop.” But are these headlines really telling the whole story, and what do they mean to you as a natural gas customer of Avista? We’ve been talking about natural gas as a cleaner, more efficient and reliable source of energy for a long time now, but what about the economics of natural gas? How do new sources of natural gas affect wholesale costs, and how does that translate to your energy bill?
The good news is if you are an Avista customer, you have been seeing the benefits of increased natural gas supply and lower prices for some time. Through rate decreases proposed by Avista and approved by state regulators, Avista customers have seen the wholesale price of natural gas decrease by more than 48 percent since 2008.
But the relationship between headline-making wholesale prices and what you see on your bill each month is not always that clear cut. Over the next few weeks through this natural gas pricing series, we’ll discuss the cost components that make up a customer’s natural gas bill and try to clear it up a bit.
Natural gas bills include wholesale gas costs, interstate pipeline transportation costs and costs for equipment and people to get the natural gas to the customer
|There are three main drivers of your natural gas
energy bill: Whole sale gas costs; fixed
transportation costs; equipment and people.
Click to see the full chart.
There are three main drivers of your natural gas energy bill:
1. The cost of purchasing natural gas on the wholesale market is about 38 cents of every dollar you pay for natural gas. This cost is passed through to you without any mark-up or profit to Avista.
2. The cost to transport the natural gas on pipelines from the source or supply basins to Avista’s system is about 17 cents of every dollar you pay for natural gas. This cost is also passed through without any mark-up or profit to Avista.
3. The cost of the equipment and people it takes to safely and reliably deliver natural gas through our distribution system to your home or business is about 45 cents of every dollar you pay for natural gas. 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 you.
You probably don’t think much about it when your gas furnace kicks on, or when you turn on your gas stove or use water that is heated with natural gas. But, like electricity, it’s taken a journey to get to you. Before we can deliver it to your home, Avista has to first purchase the natural gas and have it transported through large pipelines over long distances to our delivery system. The combined costs of purchasing and transporting natural gas to our system for delivery to you make up more than half of your natural gas bill. Avista doesn’t mark up these costs or make any money on this – customers pay what we pay.
When we purchase natural gas from the wholesale market, our goal is to secure reliable gas supply at the lowest cost so we can keep your costs as stable and low as possible.
Natural gas – grown at home
Natural gas is an abundant resource found throughout the United States and Canada. Since 2007, domestic natural gas production has increased, primarily due to the advances in natural gas drilling that have allowed production from previously untapped shale gas formations
throughout North America. The Energy Information Administration
now estimates that at today’s consumption levels there is enough natural gas to last the United States almost 100 years.
Avista is fortunate to be located near two prolific natural gas supply basins; the Western Canadian Sedimentary Basin, primarily located in Alberta and British Columbia, and the Rocky Mountain basin in Wyoming, Utah and Colorado. Not only is the North American natural gas resource base vast, the American Gas Association
describes it as “a home‐grown North American fuel whose efficient use by power plants, homes and businesses contributes to cleaner air.” Beyond the comfort and warmth it brings to our homes, natural gas is also recognized for its environmental attributes and contribution to American energy independence.
Wholesale prices are market driven
|Over the past decade, wholesale
natural gas prices have been volatile,
at times increasing sharply and then
dropping just as sharply.
Click to see full chart.
Natural gas is a commodity. Ultimately the cost is set by the market. As in most free markets, natural gas prices are primarily influenced by supply and demand. Over the past decade, wholesale natural gas prices have been volatile, at times increasing sharply and then dropping just as sharply. Factors that have contributed to the volatility of natural gas prices including supply, demand, severe weather events like Hurricanes Katrina and Rita in 2005, and access to shale natural gas supply.
Avista’s purchasing plans provide more stability and help keep costs low
Avista wants what our customers want: an adequate supply of natural gas at affordable prices. Our goal is to strike a balance of ensuring reliable supply at competitive prices for our customers, and stabilizing natural gas prices so our customers see fewer fluctuations in their energy bills. Our employees in natural gas purchasing work every day to do this in several ways:
• We purchase natural gas from the supply basins mentioned above. These purchases are a mix of fixed price long-term, medium-term, and near-term purchases, which allow us to lock in prices for the future, and purchases on the short term market (also called the “cash” or “spot” market).
• We secure capacity rights on six large pipelines to assure delivery of supply from the supply basins to Avista’s distribution system.
• We’re part owner of Jackson Prairie, an underground storage facility in Washington State, so we can purchase natural gas and store it until we need it. We often purchase natural gas during warm‐weather months, when it traditionally costs less, and store it for delivery to our customers for use on those cold winter days.
Our natural gas purchasing plans are reviewed and revised annually to reflect evolving market conditions. Sound purchasing practices and decades of experience have helped us keep costs lower and more stable for our customers. In fact, Avista is paying some of the lowest wholesale natural gas prices among our utility peers in the region. It means our customers have some of the lowest natural gas rates in the northwest.
We’re also thinking ahead. Periodically Avista updates our 20-year outlook, which looks at how we can meet our customers’ natural gas needs over the long term, in a reliable manner at the lowest cost. We call this our Integrated Resource Plan.
We updated it in 2009, and we are currently in the process of completing our 2012 plan, which will be available at the end of the year.
As we mentioned earlier in the article, the combined costs of purchasing and transporting natural gas to our system for delivery to you can be more than half of your natural gas bill. These costs can also affect your electric bill. In our next article, “Natural Gas Pricing 101, Part 2: Natural Gas Supply and Your Bill,” we’ll explain more about how, with approval by state regulators, we pass these costs directly through to customers.
Later, we’ll discuss the remaining portion of your natural gas bill. “Natural Gas Pricing 101, Part 3: Natural Gas Delivery and Your Bill” will explain how your energy rates are also driven by the rising costs of the equipment and people it takes to get natural gas to your home safely and reliably.
Jul 19 , 2012
Avista equips first responders with electric and natural gas safety training
To ensure the safety of our customers, employees and the public, Avista works closely with local firefighters, police and other first responders so we are all prepared to take action when called upon.
This work includes coordinating with other first responders in emergencies, mock accident training and basic electric and natural gas training.
Last month, the City of Spokane SWAT Team came to Avista to learn a little electric and natural gas 101, as well as how to disconnect electric and gas meters in an emergency situation.
The Spokane SWAT Team supports the Spokane Police Department with tactical response to critical incidents, such as hostage, barricade, or sniper situations. One of their objectives during an incident is to make the area safe. This includes eliminating the perpetrator’s ability to misuse electricity or natural gas to harm or threaten the safety of others.
“If there are potential electric or natural gas hazards, we always encourage first responders to contact us first,” said Bill Baker, Avista gas training and codes coordinator. “If they have to act at that moment, we’ve ensured they have the proper training to defuse a potentially volatile situation with electricity or natural gas.”
Baker, along with Natural Gas Foreman Dan Gigler taught the class of 30 SWAT team members how to pull an electric meter, how to turn off the gas meter and the importance of wearing safety equipment in the process.
First responders often put their lives on the line to ensure the public’s safety. Avista’s gas and electric servicemen and women, also first responders, ensure the public’s safety by making a situation safe from any potential electric or natural gas dangers.
Safety for everyone is always top of mind every day that we work to deliver energy to your homes and businesses. The training and partnership with other first responders is just one of the many examples of our commitment to your safety.
Jul 02 , 2012
Natural gas rates were lowered 6.4% in Wash., 6% in Idaho in March
But lower wholesale natural gas costs have added challenges to offering energy efficiency rebates and incentives to our customers in Washington and Idaho, making the programs no longer cost effective. It costs more to provide natural gas energy efficiency rebates and incentives than it costs for the natural gas that customers use.
That’s why Avista has requested to suspend the natural gas programs in Washington and Idaho effective September 1. If the utility commissions in the two states approve the requests, customers would still have time to get their rebate and incentive forms to Avista.
Jun 19 , 2012
Post by Brandi Smith
Standing in front of an old wood panel wall filled with items such as old smashed-up lunch pails, hot sticks, pole climbing gear, chew cans, and painted plaques, engraved and taped with names, nicknames and years of service entices many questions for those who walk the halls of Avista’s Lewiston/Clarkston construction office.
This particular lunch pail proved difficult
to smash...even with a line truck.
It is rumored that it had to be run over
three or four times before
it finally caved.
The tradition of hanging up an item of significance upon retirement began in the early 1950s. Back then, metal lunch pails were pretty common, and on an employee’s last day, they would back a line truck over the lunch pail, smashing it in honor of their years of service. It is rumored that one lunch pail proved particularly difficult to smash and had to be run over three or four times.
Over the years, the items hung on the wall shifted from lunch pails to other possessions of significance. It’s a menagerie of objects contributed from lineman, gas servicemen and even folks from the Clarkston Water Department.
The wall of fame, as they call it, represents more than years of service. It represents pride and years of hard, physically demanding work with an intangible reward – the lights are back on and the gas is flowing. Customers have the energy they need to power their lives.
If the wall could talk, we could all enjoy hearing the stories from the lineman who just retired after 35 years of service or the gas serviceman who began his career in the late 1950s, back when gas was new to the area. The wall of fame will occasionally get visits from the public wanting to see their friend or family member’s symbol of a lifetime of hard work.
A visit to the office also begs the question. What item represents you upon your retirement? Something to think about.
Jun 08 , 2012
Safety is a family affair in Oregon
Avista’s commitment to safety extends beyond our workday and jobsite – all the way down to our grandkids. Last Saturday Avista’s Eddie Randles recruited his 7-year-old granddaughter Arianna to help at Safety Saturday at the Rogue Valley Mall in Medford, Oregon.
Randles started the day with a Tailboard Meeting – just like employees who go out into the field to fix gas leaks or build new pipelines. (That’s her focused, arms-crossed look in the picture.) The detailed briefing taught Arianna all of the natural gas display items for the event and how they work.
“She even installed my pressure gauge build-up on the gas meter and found a leak with the Rover,” Randles said. “She was so versed in the different parts of the meter she was able to describe it to the Red Cross gentleman [see photo].”
The event was free and open to the public. Dozens of organizations provided information and exhibits, from document spreading to fire prevention to electric and gas safety.
Thanks Eddie and Arianna for going the extra mile for safety!
May 30 , 2012
Over the past few years, we’ve heard from our customers and employees that they want more information on how we do business in areas like utility operations, environmental stewardship and our community impact. We’re glad you asked!
That information and more is available in our fourth annual report on our performance, “Together We Will Build Shared Value,”
now online at avistautilities.com.
Our primary mission is to provide the energy you need for your life. The back story is all about what goes into providing that energy and how often this has additional benefits to the customers and communities we serve. That’s shared value.
In this year’s report, we tell many stories of how shared value is created throughout our business. For example, in the Utility Operations section we talk about how Avista must meet state-mandated energy savings targets. As part of our sustainable business practices, the report is published online
We’ve made PDF files available of the entire report and four of its sections for your convenience in sharing the report with others.
Shared value is at the heart of what Avista does every day. We hope you’ll take the time to read this year’s report and give us your feedback
. We want to hear from you about how – together – we can continue to build shared value.
May 23 , 2012
Post By Brandi Smith
The 811 Call Before You Dig, Damage Prevention Bike made its way through Spokane on May 18 and 19 to help us spread the word about the importance of calling 811 before you dig. The custom chopper revved up a lot of attention as Avista, in partnership with One Call Concepts and the Inland Empire Utility Coordinating Council featured the bike at three important community events. The Spokane Shock game on Friday night (congrats Shock on a nice win!), the Lilac Festival Annual Car Show and the Torch Light Parade in downtown Spokane on Saturday night.
One Call Concepts, Inc. commissioned Paul Jr. Designs to build the 811 Bike to help promote awareness of the importance of preventing damage to underground facilities. In 2011, for every 1,000 utility locates performed in Avista’s service territory, 7.9 instances of utilities being dug into occurred. This is much higher than the national average, which is 3.7 per 1,000 utility locates. Avista’s goal is to reduce the amount of dig-ins to our underground lines by 10 percent. Help us continue to spread the word about the importance of calling 811 before you dig.
May 07 , 2012
Avista is replacing nearly 9 miles of natural gas
pipeline in Davenport, Wash. The project is
estimated to cost more than $3 million. The
work will be conducted May to October.
Bring in the diggers and heavy equipment because construction is underway in Davenport, Wash., as Avista replaces nearly 9 miles of natural gas pipeline that’s approaching the end of its service life. The project carries a price tag of more than $3 million. It’s part of Avista’s commitment to maintain and upgrade our natural gas pipeline system.
From May through October, Avista-authorized contractor Loy Clark will be installing new natural gas pipelines in streets and alleys throughout Davenport.
As we replace the natural gas pipeline one section at a time, Davenport natural gas customers will experience a short interruption of service while we’re working on the natural gas pipeline in a specific area. Customers will be notified two days in advance of working in their neighborhood so they can plan ahead. Once the work is complete and service is restored, qualified Avista personnel or contractors will safely relight appliances, such as water heaters.
Attendance was light when we held an open house at the Davenport Memorial Hall on Wednesday, May 2, to answer questions about the project. Hopefully that means that folks in Davenport are comfortable with the project.
This six-month, $3 million project is just one example of how Avista must continually invest in maintaining and upgrading the natural gas pipelines that allow us to serve our customers.
Apr 23 , 2012
Ashland customer praises employees for going the extra mile
Guest Blog Post by Brian TaylorMedford, Oregon Gas Operations Manager
In my position as Gas Operations Manager in Medford, I hear from customers quite a bit, which I enjoy. One of the best parts of my job is when a customer goes above and beyond to simply thank our employees for work they did at a home or business. Recently a customer called after two of our employees spent time at her home ensuring the safe operation of her very antique range.
It’s easy to talk about customer service, but it’s another thing to actually do it - Avista employees Marty Moore and Eddie Randles live it.
In mid-March, Moore was at the Ashland customer’s home. Her antique range had a leak that needed to be fixed. Given the age and model of the appliance Moore was concerned that the customer would have trouble finding a dealer who could provide service. He called a few on her behalf and found no takers. So, when Moore was called away on an emergency call, he called in Randles, who was working on some natural gas pipelines nearby, to help out. This avoided immediately shutting the customer off.
Randles was able to fix the small leak around the control body seal. He also cleaned and adjusted the pilot light while he was in there. The range was so old that the name plate was faded. Despite that, he was able to get enough information about the range to find a dealer in California who still stocks parts for it. This information just might come in handy in the future.
Here’s the best part. The customer called and spoke to two different Customer Service Representatives about the employees who visited her home.
“She was absolutely amazed with all [Moore and Randles] have helped her with today,” wrote one CSR.
Another CSR wrote, “The serviceman was very professional, friendly and went above and beyond what she expected. He paid attention to detail and helped her with things she didn’t expect, every little detail to help her get back in service . . . She is very happy with Avista.”
We do little fixes, like this one, for customers all the time. If a customer needs something extra and we can provide it without too much trouble, we’ll go ahead and do it. For the customer in Ashland with the antique range, these fixes went a long way.
Have you had a similar experience? Tell us about it in the comments.
Apr 20 , 2012
By knowing what’s below, contractors and homeowners are making wise decisions
Summit Group, Inc.
A landscape design, construction and maintenance company
Digging in the dirt has been a part of my daily life for the last 29 years I have been in business. As the owner of a full-service landscape company, safety, as you can imagine is a huge focus in my line of work.
Landscaping in the Spokane and Couer d’Alene region is a seasonal operation which means tight schedules and deadlines. It is important for my company to have clear lines of communication between the project manager and crew, the homeowner, the general contractor and/or subcontractor and the utility locate company. In fact, Clearwater Summit Group
is never bashful about calling in a utility locate. One wrong move can compromise the safety of our employees as well as cost us time, money and credibility with the homeowner or general contractor.
In order to maximize our efficiency and safe operations, we have a clearly defined process for calling in utility locates. Our one rule of thumb is to never assume anything. If there is a doubt, we encourage our employees to voice their concerns to the project manager.
Since April is National Safe Digging Month, we are making it our mission at Clearwater Summit Group is to educate our customers about using the 811 Call Before you Dig system. Many of our clients will add to their landscape year after year and we want them to be aware of how important it is to know what’s below the surface of their yards before they embark on any DIY projects. Please help us and Avista
spread the word about the importance of using the 811 system
A message about 811 from Avista
We are proud to post messages from members of the community who are interested in helping us spread the word about the importance of using the free 811 utility locate system. Safety and reliability are top priorities for customers and that’s important when it comes to natural gas. Last year there were 552 customer or contractor dig-ins to Avista’s underground natural gas lines. That’s 7.9 dig-ins for every 1,000 locates which is higher than the national average of 3.7. Avista’s goal is to reduce the number of dig-ins in 2012 by 10 percent to increase public safety and reduce costs.