Nov 03 , 2014
 

Over the last couple of months, we’ve told you about annual rate adjustments that we have filed with our utility commissions in each of the states we serve. These included annual Purchased Gas Cost Adjustments (PGA) filed in Washington, Idaho and Oregon, the Idaho Power Cost Adjustment (PCA), and rate adjustments in the Washington and Idaho Residential Exchange Programs.

 

Purchased Gas Cost Adjustment (PGA)

Power Cost Adjustment (PCA)

Residential Exchange Program

The PGA is an annual adjustment that balances the actual cost of wholesale natural gas purchased by Avista with the amount already included in current rates - we do not mark up the cost of natural gas to meet customer needs. We are required to file the PGA each year, and costs can go up or down, based on the cost of wholesale natural gas.

The PCA is an annual rate adjustment in Idaho made to reflect certain differences between Avista’s actual cost of generating and purchasing electric power to serve customers and the cost currently included in customer rates.

 

The Bonneville Power Administration (BPA) Residential Exchange Program provides a share of the benefits of the federal Columbia River power system to the residential and small farm customers of the investor-owned utilities in the Pacific Northwest. We apply the benefits we receive, which typically fluctuate from year to year, to customers as a credit on their monthly electric bill.

 

 

These rate adjustments, filed between July 30, 2014 and Sept. 15, 2014, have been approved by the various utility commissions, and customers will begin seeing these in reflected in their monthly utility bills, as of Oct. 1 (Idaho PCA and Idaho Residential Exchange Program) and Nov. 1 (all other filings). Below are the details of each of these adjustments in each state.

 

Idaho

Filing

Details

Purchased Gas Cost Adjustment (PGA)

Residential customer bills based on average usage of 60 therms per month:

·        Decrease of $1.16 or 2 percent

·        Revised monthly bill of $58.32

Power Cost Adjustment and Residential Exchange Program

Residential customer bills based on average usage of 930 kilowatt hours per month:

·        Increase of $3.45 or 4.2 percent per month

·        Revised monthly bill from $81.88 to $85.33

 

 

Read more about these filings here and here.

 

Oregon

Filing

Details

Purchased Gas Cost Adjustment (PGA)

Residential customer bills based on average usage of 47 therms per month:

·        Increase of $4.36 or 7.8 percent

General rate change from 2013 general rate case

This increase is to recover capital costs related to natural gas pipe replacement:

·        Increase of $0.17 or 0.3 percent

Overall

Residential increase of 8.1 percent with a revised monthly bill from $55.97 to 60.50

Read more about these filings here and here.

 

Washington

Filing

Details

Purchased Gas Cost Adjustment (PGA)

Residential customer bills based on average usage of 65 therms per month:

·        Increase of $0.65 or 1.1 percent

·        Revised monthly bill of $61.84

Residential Exchange Program

Residential customer bills based on average usage 965 kilowatt hours per month:

·        Decrease of $1.06 per month or 1.3 percent

·        Revised monthly bill from $80.09 to $79.03

Read more about these filings here.

 

 

Published: 11/3/2014  10:32 AM | 0  Comments | 0  Links to this post

Oct 28 , 2014
 
By Grant Forsyth, Avista Chief Economist 
 
When tracking prices of residential real estate, I like to follow the House Price Index (HPI) produced by the Federal Housing Finance Agency (FHFA, http://www.fhfa.gov). The FHFA has several versions of the HPI, but I tend to follow the Quarterly All Transactions Index (ATI).  This index is calculated for all U.S. metropolitan statistical areas (MSAs)—that is, counties with metro areas exceeding 50,000 residents.  Regionally, both Spokane and Kootenai counties are MSAs. 

The ATI follows repeat transactions on the same single-family residential properties.  The ATI is restricted to existing homes with conventional mortgages that have been securitized by Fannie Mae or Freddie Mac—in most metro areas this means homes with valuations $417,000 or less.   Thus, the ATI tracks what I call, “homes for mortals.”  The index is calculated so that first quarter 1995 equals 100. 

Figure 1 (below) shows the ATI for Spokane and Kootenai counties from first quarter 1984 for Spokane and first quarter 1991 for Kootenai.  Spokane has a longer series because it’s been an MSA longer.  Note that pre- bubble, the ATI for both MSAs tracked very closely.  The housing bubble which started in 2004 can be clearly seen in the index, with Kootenai showing the more pronounced run-up in prices. 

Following the housing market correction that started at the end of 2007, the ATI fell to levels consistent with the trend in place before 2004.  In other words, the trend in regional home prices has more or less returned to its pre-2004 path.  This means annual home price growth has reverted to levels more in line with growth pre-housing bubble.  For home owners that did not sell during the bubble, it’s as if the bubble’s price gains never occurred.   Figure 1 demonstrates the classic “reversion to the mean” that economists often talk about.

Table 1 also demonstrates this by using the ATI to calculate average annual home price growth for three different periods: the pre bubble period of 1991-2003, the bubble period of 2004-2007; and the entire 1991-2003 period.  This is done by using the ATI to calculate the average annual rate of growth in different periods.   The average annual growth rate in the U.S. Consumer Price Index (CPI) is also shown.
Table 1 shows that in the decade before the housing bubble, existing home prices were about 2 percentage points higher than CPI inflation.  Over the bubble period, the spread over inflation increased by more than 10 percentage points.  For the entire 1991-2013 period the spread has been less than one percentage point.  This history suggests that, as a rule of thumb, normal price appreciation for existing homes in our metro region should be in the range 0 to 2 percentage points above CPI inflation.  

Currently, the Federal Reserve’s long-run target for consumer inflation is 2% with a range of 1.5% to 2.5%.  If history is good guide and the Fed’s targeting is successful, under normal conditions, long-run price appreciation of existing homes should be in the range of 1.5% to 4.5%.  Periods of existing home price growth significantly above 4.5% should be taken with some caution.  That is, without evidence of a permanent increase in the region’s population and/or income growth—for example, the region becomes the next Silicon Valley—then any rapid price appreciation is probably not sustainable over the long-haul.
 

 
 
 
Published: 10/28/2014  9:20 AM | 0  Comments | 0  Links to this post

Oct 14 , 2014

 


Careers in Energy Week shines a light on the need for a skilled workforce in energy

Do you know someone looking for a job? Is this person a customer-focused, savvy individual who likes to work on teams and think outside the box? If yes, he or she should consider a job at Avista Utilities.

Nearly half of today’s energy workforce will be retiring in the next decade, and Avista Utilities is no exception to this trend. In fact, Avista predicts more than 25 percent of its employees will retire in the next five years and 40 to 50 percent in the next ten years. This, in combination with a growing need for tech-savvy employees, has Avista in need of skilled individuals to fill roles across the organization.

Careers in Energy Week, Oct. 13 – 17, is a time to shine a light on the need for a skilled workforce in energy.

Avista is focused on long-term workforce development to build this much-needed talent pool, including women in non-traditional roles and careers, diverse candidates and military veterans who have transferrable job skills. 

The right education and training will provide candidates with a rewarding, family-wage career. And Avista wants people to know there’s not just one right path. In fact, there are multiple paths to finding a career in energy, whether it’s through STEM-related education through a university, or trade school and apprenticeships.

Depending on the career path, some energy jobs don’t require a college degree, which may appeal to students and job-seekers looking for viable alternatives to the traditional four-year degree.     

Over the next few years Avista expects career opportunities to open up in a variety of fields including:
• Line workers
• Technicians
• Engineers
• Operators
• Customer Service Representatives
• Office Support Workers

For more information about careers at Avista, visit www.avistacorp.com/careers.

 

Published: 10/14/2014  7:56 AM | 0  Comments | 0  Links to this post

Sep 25 , 2014

By Mike Faulkenberry, Avista Director of Natural Gas

 

You may have read or heard recent national and local media stories about natural gas pipeline safety concerns. At Avista, our top priority is safety for the public and our employees. We’d like to share some important information with you about Avista’s natural gas system.

 

The integrity of our system:

·         Avista does not have any of the cast iron or bare unprotected steel pipes in our natural gas system that were highlighted in a recent USA Today article.

·         Most of Avista’s natural gas pipe was installed in the after the 1950s. It is a much newer system than in other parts of the country. 

·         Avista uses plastic and steel distribution piping that is less susceptible to leaks compared to unprotected bare steel and cast iron pipes.

·         All of Avista's underground natural gas pipelines are periodically walked in a leak survey. Our inspectors search for leaks using highly sensitive equipment that has the ability to detect natural gas leaks at levels far below those that are a safety concern or that you can smell. If any leaks are found, they are documented and any necessary repairs are made.

·         Avista adds an odorant to natural gas that is four-times the level set in the Federal Pipeline Safety Regulations. The odorant, which smells like rotten eggs, allows for leaks to be detected far below hazardous levels. If you think you detect a leak, please leave the area and contact Avista immediately at 1-800-227-9187.

·         Avista takes immediate action to fix all hazardous leaks and repairs non-hazardous leaks expeditiously.

 

Investing in maintaining our system:

·         Along with many other utilities across the country, Avista first began installing natural gas plastic polyethylene pipes during the late 1960’s.  Some of this plastic pipe is approaching the end of its service life, including early vintages of Dupont Aldyl-A.  Avista started to proactively replace its early vintage Aldyl-A pipe in 2012 and continues to do so through a prioritized systematic approach. 

·         The Natural Gas Pipeline Replacement Program is a result of Avista’s commitment to maintain a safe and reliable natural gas pipeline system. Avista will replace approximately 730 miles of Aldyl-A natural gas pipe, installed prior to 1987. We will also perform preventative maintenance on 16,000 service taps over the next 20 years in Washington, Idaho and Oregon.

·         Avista is prioritizing this replacement work based on specific criteria such as age of pipe, soil conditions and population density. Remember, Avista performs regular leak surveys on its entire natural gas pipeline, including Aldyl-A pipe.

·         Manufacturing processes have improved over time. While Aldyl-A pipe may be more prone to cracking than plastic pipe manufactured today, it is not of concern if it was installed properly, and has not been disturbed since installation.  

·         Avista is investing approximately $16 million per year for the next 20 years in our natural gas replacement program. Find out what neighborhoods we’re completing in 2014. Visit www.avistautilities.com/gasprojects for more information.

 

Published: 9/25/2014  4:11 PM | 0  Comments | 0  Links to this post

Sep 15 , 2014

Today, Avista announced that it filed its annual Purchased Gas Cost Adjustment (PGA) with the Idaho Public Utilities Commission (IPUC) that if approved, could decrease natural gas rates for customers in Idaho by an overall 2.1 percent.

 

We’ve seen wholesale natural gas prices that were higher over the past year which was caused, in part, by a colder than normal winter throughout the United States. That colder than normal weather led to a higher level of natural gas usage by Avista’s customers, resulting in higher natural gas revenue, which offset the higher commodity costs.

 

Purchased Gas Cost Adjustment (PGA)

The PGA is an annual adjustment that balances the actual cost of wholesale natural gas purchased by Avista with the amount already included in current rates - we do not mark up the cost of natural gas to meet customer needs. We file the PGA each year, and costs can go up or down, based on the cost of wholesale natural gas.

 

Residential Customer Bills Based on Average Usage of 60 Therms a Month

·         Decrease of $1.16 or 2 percent

·         Revised monthly bill of $58.32

·         If the request is approved, it would take effect on Nov. 1, 2014

 

Current Natural Gas Bill

Approximately 55 percent of an Avista customer’s natural gas bill is the cost of purchasing and transporting natural gas and 45 percent of the bill is delivery of natural gas to our customers, by Avista.

 

Read the full news release here. You can also read about the annual Power Cost Adjustment (PCA) filed in Idaho as well as the settlement agreement reached to extend the current rate plan in Idaho.

 

Published: 9/15/2014  1:11 PM | 0  Comments | 0  Links to this post

Sep 12 , 2014

Today, we announced we have filed two annual rate adjustment requests in Washington that, If approved by the Washington Utilities and Transportation Commission (UTC or Commission), would slightly decrease electric rates and slightly increase natural gas rates.

 

You may recall that we told you about a settlement that we reached in Washington that would raise base retail rates beginning Jan. 1, 2015, if approved, and wonder why we are talking with you about your rates again.

 

The Purchased Gas Cost Adjustment (PGA) and Residential Exchange Program filings made today are annual adjustment filings and are separate from a general rate case and the settlement agreement reached in Aug. 2014 regarding base retail rates in Washington.

 

Purchased Gas Cost Adjustment (PGA)

The PGA is an annual adjustment that balances the actual cost of wholesale natural gas purchased by Avista with the amount already included in current rates - we do not mark up the cost of natural gas to meet customer needs. We are required to file the PGA each year, and costs can go up or down, based on the cost of wholesale natural gas.

 

Residential Exchange Program

The Bonneville Power Administration (BPA) Residential Exchange Program provides a share of the benefits of the federal Columbia River power system to the residential and small farm customers of the investor-owned utilities in the Pacific Northwest. We apply the benefits we receive, which typically fluctuate from year to year, to customers as a credit on their monthly electric bill.

 

In 2014, Avista received a higher level of benefits than it had projected in last year’s rate adjustment.

 

Residential Customer Bills Based on Average Usage

 

Electric – Residential Exchange Program

·         Based on average usage of 965 kilowatt hours per month

·         Decrease of $1.06 per month or 1.3 percent

·         Monthly bill change from $80.09 to $79.03

 

Natural Gas – PGA

·         Based on average usage of 65 therms per month

·         Increase of $0.77 per month or 1.3 percent

·         A revised monthly bill of $61.96

 

Current Natural Gas Bill

Approximately 55 percent of an Avista customer’s natural gas bill is the cost of purchasing and transporting natural gas and 45 percent of the bill is delivery of natural gas to our customers, by Avista.

 

 

Read the news release here.

 

Published: 9/12/2014  1:06 PM | 0  Comments | 0  Links to this post

Sep 11 , 2014
Citizens should follow simple guidelines to prepare for a potential disaster
 
 
September 2014 marks the 11th annual National Preparedness Month and creates an opportunity for Avista to remind customers about the importance of being prepared for unexpected emergencies such as the recent storms that rolled through sections of its Washington and Idaho service area.
 
The Federal Emergency Management Agency and Department of Homeland Security sponsor this national initiative and uses September to remind all Americans to take simple steps to prepare for emergencies at home, school, work and in our communities.
 
As we have experienced recently in Eastern Washington and Northern Idaho, weather events like summer storms can ravage entire communities with effects lasting for days. Being prepared for severe weather like thunderstorms, wind, ice and snow storms or other natural disasters can help our residents and their families deal with the results of such events.
 
“We know severe weather can occur anytime and being prepared can be the difference between scrambling for necessities and having the resources to help your own family and others,” said Don Kopczynski, Avista’s vice president of energy delivery.
 
As winter approaches, now is the perfect time to get prepared for events that could lead to a power outage. Here are some guidelines for taking action to prepare:
 
·         Preparing for an outage. Keep emergency supplies on hand, including flashlights, a portable battery-powered radio and clock, water and non-perishable food and a manual can opener. Make sure cell phones and tablets are fully charged and fire alarms have fresh batteries. Know how to manually open and close electric garage doors, security doors and gates.
·         During an outage. Report an outage or downed power line to Avista at avistautilities.com or call (800) 227-9187. Assist family members or neighbors who may be vulnerable if exposed to low temperatures. Keep your refrigerator and freezer doors closed to prevent food spoilage.
·         After an outage. Wait a few minutes before turning on major electrical appliances to help eliminate problems that could occur if there’s a sharp increase in demand after restoration.
·         For more information and tips visit: www.avistautilities.com/safety/outages.
 
Being prepared for an outage or a natural disaster will allow you to have the resources to take care of your family and assist others if needed. Avista encourages all residents to use the month of September to put their own emergency plan together. Here is a helpful guide to doing just that:
·         Week 1: Make a plan to reconnect with family after a disaster
·         Week 2: Know how to plan for specific needs before a disaster occurs
·         Week 3: Learn how to build an emergency kit
·         Week 4: Learn how to practice for an emergency
 
 
Published: 9/11/2014  9:58 AM | 0  Comments | 0  Links to this post

Sep 03 , 2014
 
Posted by Grant Forsyth, Avista Chief Economist
 
Every year the National Bureau of Economic Research (NBER), a non-partisan organization, dates turning points in the U.S. business cycle. This June, the NBER noted that five years have passed since the end of the Great Recession, which began in December 2007. For much of the country that has meant a full recovery, but for the Inland Northwest, it’s a different story.
 
The U.S. overall has recovered, but as the Chief Economist at Avista the most common question I get is, “How has the Inland Northwest done in the recovery?” The answer: Not nearly as well.  For the purposes of comparison, I used Spokane (WA) and Kootenai (ID) Counties, the two largest economic areas in the Inland Northwest. Figure 1 (below) shows year-over-year non-farm employment growth (www.bls.gov) in those counties since June 2009, the recession’s official end.  Year-over-year means calculating the employment growth rate between the same months between consecutive years—for example, in July 2014 (the most recent month available), year-over-year employment growth compared to July 2013 was 1.9% for the U.S. and 1.7% for Spokane-Kootenai. 
 
Figure 1: Chart
 
Except for the first three quarters of 2013, the region’s employment growth has been consistently below the rest of the U.S.  Between October 2010 and August 2012, the Inland Northwest’s employment growth was at one of its lowest points, consistently coming in at less than 1%. That number is well below the U.S. standard during that time, which prompts comparisons to previous recessions to find some sort of parity.  Even with those comparisons, recovery from the most recent recession checks in at a much slower pace. The slowness of the current recovery is reflected in the fatigue felt by many workers still struggling to find employment or move from part-time to full-time work.
 
As evidenced in Figures 2 through 4 (below), the U.S. recovery time has been increasing since the 1991 recession, a recession the Inland Northwest avoided.  In part, this reflects deeper recessions in 2001 (due to the bursting tech bubble and 9/11) and 2007 (due to the bursting housing market and subsequent global financial crisis).  The nation’s recovery time from the 2007 recession was about 2.5 times longer than the 1991 recovery—that is, it’s taken six and half years for the country to fully recover its employment level at the recession’s start.  In the case of the Inland Northwest, after 78 months we still remain about 2% below our December 2007 employment level.  At current growth rates, it could be another 12 to 18 months before we reach that 2007 level.
 
The slow national employment recovery is the primary factor behind the Federal Reserve’s prolonged monetary stimulus.  However, this stimulus is expected to end sometime in the first half of 2015 and may come before the Inland Northwest has fully recovered its employment lost during the Great Recession.           
 
Figure 2: Chart       

 Figure 3: Chart
 
Figure 4: Chart
 
 
Published: 9/3/2014  12:32 PM | 0  Comments | 0  Links to this post

Sep 02 , 2014

Today, Avista filed a general rate request with the Public Utility Commission of Oregon (PUC) to increase natural gas base rates in Oregon.

 

Base rates are those that cover the total cost of providing natural gas service to customers.

 

This request is driven by the continued investment in the systems and technology we use every day to serve customers.

 

You may recall that we filed a purchased gas cost adjustment (PGA) in Oregon in July 2014. The PGA is an annual adjustment that balances the actual cost of wholesale natural gas purchased by Avista with the amount already included in current rates - we do not mark up the cost of natural gas to meet customer needs. Costs can go up or down, based on the cost of wholesale natural gas.

 

The PGA is filed each year and is required by the PUC. It is separate from a general rate case.

 

Details and Residential Customer Bills Based on Average Usage

Base Rates

·         Overall increase of  9.3 percent

Natural Gas - customer using an average of 47 therms per month

·         Increase of $5.78 per month or 10.3 percent

·         A revised monthly bill of $61.75

·         An increase in the monthly basic charge from $8.00 to $10.00

 

 

Timeline

In Oregon, the PUC has up to 10 months to review and make a decision. During this time, the PUC will review our costs, review relevant data and listen to public testimony. With this information, they will approve rates they feel are reasonable and fair. If approved, new rates would take effect no later than July 2015.

 

What does this look like?

The main drivers of this request include the continued capital investments in natural gas infrastructure and technology. Capital projects that are included in this rate request are described below.

 

Customer Information System and Enterprise Asset Management System

Avista’s customer information system is the foundation of Avista’s day-to-day customer operations. For 20 years, the system has been meeting the needs of our customers and the company, but like pipe and equipment, it needs to be replaced. The system touches all of our customers and supports traditional utility business functions, such as meter reading, customer billing, payment processing, credit, customer service orders and material management.

 

Natural Gas Pipe Replacement

Avista continues a major project to systematically replace portions of natural gas distribution pipe. The project is replacing hundreds of miles of natural gas pipeline that was installed prior to 1987.

 

Learn about the rate-making process here. Read the news release about this request here.

 

Published: 9/2/2014  12:59 PM | 0  Comments | 0  Links to this post

Aug 18 , 2014

Today, Avista announced that a full settlement agreement has been reached in Washington.

 

You may recall we filed a general rate request on Feb. 4, 2014 to increase electric and natural gas base rates in Washington that would support the ongoing need to expand and replace the facilities and equipment we use every day to serve our customers. Facilities like our 106-year-old South Channel Dam in Post Falls, Idaho and 106-year-old Powerhouse in Nine Mile, Washington. This settlement agreement would conclude the rate case and support these efforts.

 

This agreement has the full support of all parties involved in the rate case and is the result of these parties working together to agree on a settlement that is beneficial for our customers and our company.

 

What Does This Mean?

If approved, the proposed settlement agreement would increase electric and natural gas base rates as well as account for new and expiring rebates. Base rates are those that cover the total cost of providing electricity and natural gas service to customers. This includes generating and purchasing energy as well as the delivery of that energy to customers.

 

Here is what this looks like:

 

Item(s)

Details and Results

Base revenues

·         Increase electric by 1.4 percent or $7.0 million

·         Increase natural gas by 5.6 percent or $8.5 million

Expiring rebates

·         Electric customers are currently receiving benefits from two rebates that are reducing monthly energy bills by 2.8 percent during 2014.

·         These rebates will expire at the end of 2014.

New rebates

·         Avista would provide a rebate to customers of $8.6 million over 18 months related to its sale of renewable energy credits, which would partially replace the expiring rebates and reduce customers’ monthly bills by 1.2 percent.

Energy Recovery Mechanism (ERM)

·         A credit of $3.0 million from the existing ERM deferral balance would be returned to electric customers to offset the 2015 rate increase, which would reduce the overall electric billed rate increase from 1.4 percent to 0.8 percent.

LIRAP

·         Funding available for Avista’s Low Income Rate Assistance Program (LIRAP) would increase by $333,000 as a result of the settlement.

The overall change in customer billing rates from the settlement agreement, including the expiring and new rebates is 2.4 percent for electric customers and 5.5 percent for natural gas customers.

 

Residential Customer Bills Based on Average Usage

Electric – residential customer using an average 965 kilowatt hours per month

·         Total billed increase of $2.10 a month or 2.6 percent

·         A revised monthly bill of $82.19

·         An increase in the monthly basic charge from $8.00 to $8.50

 

Natural Gas - customer using an average of 65 therms per month

·         Increase of $3.62 a month or 5.9 percent

·         A revised monthly bill of $64.81

·         An increase in the monthly basic charge from $8.00 to $9.00

 

 

The bill increase for each customer group (e.g. residential, commercial) may differ due to adjustments to better reflect the cost to serve each customer group.

 

The settlement has been filed with and must be approved by the Washington Utilities and Transportation Commission (UTC or Commission).

 

For more details about the settlement, read the new release here.

 

Learn more about the rate-making process here. You can also watch this video and read this one-sheet.

Published: 8/18/2014  1:07 PM | 1  Comment | 0  Links to this post

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