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.
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.
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
· 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
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.
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:
Details and Results
· Increase electric by 1.4 percent or $7.0 million
· Increase natural gas by 5.6 percent or $8.5 million
· 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.
· 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.
· 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.
Jul 31 , 2014
Today, Avista announced that it filed its annual Purchased Gas Cost Adjustment (PGA) and related filings with the Public Utility Commission of Oregon (PUC) that if approved, could increase natural gas rates for customers in Oregon by an overall 10.4 percent. The primary reason for an increase is increased wholesale costs, driven in part by the colder than normal winter across the country.
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.
Average Customer Bill Impact (Based on average usage of 47 therms per month)
If approved, the filing would include:
· An increase of $5.45 or 9.7 percent
· A revised monthly bill of $61.42
· If the request is approved, new rates 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.
Jul 30 , 2014
Today, Avista announced we have filed two annual rate adjustment requests in Idaho including the the Power Cost Adjustment (PCA) and the Bonneville Power Administration (BPA) Residential Exchange Program. If approved, these filings would increase electric rates beginning Oct. 1, 2014.
You may recall that we told you about a settlement that we reached in Idaho that would not raise base retail rates through a general rate case in Idaho prior to Jan. 1, 2016.
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. The PCA is used to track one piece of base rates - the actual costs for generating and purchasing electric power to serve customers.
The PCA and Residential Exchange Program filings are annual adjustment filings which occur outside of a general rate case.
Power Cost Adjustment (PCA)
The PCA is an annual rate adjustment 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.
· Power supply costs were higher in 2013 due primarily to increased fuel costs and power purchase expense, some of which was required to replace the energy lost due to an outage at Unit #4 at the our Colstrip Generating Plant.
· Part of the proposed PCA rate adjustment is related to the expiration of a rebate to customers. Beginning in October 2013, Avista began passing through to customers a one-year rebate of approximately $4.6 million related to last year’s PCA. That rebate will end Sept. 30, 2014.
· The proposed PCA would pass through to customers $7.8 million in increased power supply costs that occurred over the last 12 months.
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.
The benefit Avista will receive from BPA starting in Oct. 2014 will be higher than the current level of benefits currently being passed through to applicable customers.
Customer Bill Impact (Based on average usage of 930 kilowatt hours per month)
The results of the PCA and Residential Exchange Program filings would include:
· Increase of $3.45 or 4.2 percent per month
· Revised monthly bill from $81.88 to $85.33
· If the filing requests are approved, the changes would take effect on Oct. 1, 2014
Read the news release here.
Jul 14 , 2014
Today, Avista announced that a settlement has been reached to extend the current rate plan in Idaho. The settlement proposes that there would be no increase in base retail rates for customers prior to 2016.
What Does This Mean?
The extension of the current rate plan provides rate stability for customers and is the result of a collaborative process. It is an outcome that is beneficial for our customers and the company.
· Unchanged base retail rates
· Maintained level of rebates that customers currently receive
· The opportunity to balance the recovery of costs of providing safe and reliable energy and the company’s opportunity to earn a fair return
Details of the Proposed Settlement
The details of the proposed settlement demonstrate what can be a complex process and topic.
· Replacement of two rebates that are set to expire on Jan. 1, 2015 that are currently reducing customers’ monthly energy bills by 1.3 percent on the electric side and 1.7 percent on the natural gas side.
· An estimated $3.7 million increase in pre-tax margin in 2015 for Idaho operations.
· Deferral of the majority of costs related to completion of Avista’s customer information system upgrades in 2015, as well as a change in the timing of expenses related to operations and maintenance (O&M) costs pertaining to its Colstrip and Coyote Springs 2 thermal generating facilities.
· Use of any deferral balance resulting from the 2014 Idaho earnings test to support up to a 9.5 percent return on equity (ROE) in 2015.
· If the company earns more than its currently authorized 9.8 percent ROE in 2015, 50 percent of the earnings above 9.8 percent would be deferred for future ratemaking.
PGA and PCA Adjustments
The proposed settlement applies to base rates. Avista will file annual rate adjustments including the Power Cost Adjustment (PCA) and Purchased Gas Cost Adjustment (PGA). These adjustments balance the actual costs of purchasing or generating energy and natural gas to serve customers and the amounts currently covered in rates, and are typically filed in the third quarter every year.
The settlement has been filed with and must be approved by the Idaho Public Utilities Commission (IPUC or Commission).
Read the announcement news release.
Jul 09 , 2014
A lot of things can change in 125 years, but Avista’s commitment to innovation, collaboration and providing safe reliable power is as consistent today as it was in 1889. With the launch of our sixth annual report on our operations – 125 Years of Shared Value – our stakeholders can see how the work we do today and our legacy of delivering shared value remains a core component of how we operate.
Avista’s purpose is to improve life’s quality with energy – safely, reliably and responsibly. Our Shared Value Report bring this to life by providing a comprehensive look at how our business operates and the work that goes into making this purpose a reality for our stakeholders. The content highlighted in the report demonstrates how the work we do across the company to provide energy not only powers homes and businesses, it serves as a means for creating value and making a lasting impact on those we serve.
As sustainability reporting and our reports have evolved over time, there has been an increased focus on materiality – what our stakeholders have told us is relevant to them. We have listened, and this year you will see the material topics called out throughout the report with icons. Our intent is that the icons will make it easier for readers to find the information they want.
You’ll also see stories that demonstrate shared value and our commitment to our customers, communities and the environment. Highlights include:
· Using goats as a means for taking care of noxious weeds in an environmentally friendly way
· Philanthropic giving of approximately $1.5 million through the Avista Foundation and Avista Corp.
· Employees’ donation of 46,500 volunteer hours
· Partnering with agencies and communities to complete activities that maintain and restore habitat and wetlands related to our operations on the Spokane and Clark Fork Rivers
· Implementing keyhole technology for repairing natural gas lines as a way to find efficiencies for customers and the utility
· Driving economic prosperity through involvement in community initiatives such as the Palouse Basin Water Summit, Coeur d’Alene 2030 Community Visioning and more
As part of our sustainable business practices, the report is published only online. A PDF file can be downloaded for your convenience in reading the report or sharing it 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 by email at SharedValue@avistacorp.com. We want to hear from you about how we can continue to build shared value.
Jul 09 , 2014
We all wish we could look into a crystal ball and see what the future brings, especially for our region’s economy. At Avista, we need to know what our customers’ needs will be 5, 10, or even 15 years down the road. There’s no crystal ball, so we use data and research to help inform decision makers and forecast our own economic climate so that we can continue to serve the same low-cost, reliable power to customers that we’ve provided for the last 125 years.
Leading the way is our Chief Economist, Dr. Grant Forsyth. From both a company and community standpoint, Grant is widely recognized as the resident expert when it comes to providing data that helps internal and external leaders make informed research-based decisions that benefit all of us.
Within Avista, Grant spends much of his time running statistical models to forecast energy load, which helps plan for future energy needs. He also serves as a consultant on special projects, where his research background as a Ph.D. and an Eastern Washington University professor of economics for more than a decade, make him a perfect fit for Avista.
“At Avista, people reach out to me for empirical data for special projects,” Grant said. “For example, we had somebody in health and safety that needed an analysis of languages spoken in our service territory. With my academic research background, I knew where to go to get the data and maintain the database for them.”
Grant’s teaching experience also serves an external purpose in his position: public speaking. Any given day, he speaks to local and regional groups of 5 to 500 or more. He keynotes events like Greater Spokane Inc.’s Annual Economic Forecast, meets with local business groups and community leaders, and serves on a variety of local and state economic councils, including the Governor’s Council of Economic Advisors and the Spokane Mayor’s Council on Economic Vitality .
“I’m a resource for both businesses and the general public,” Grant said. “I often get inquiries about economic issues or what unemployment numbers are telling us. I have a lot of data and research at my fingertips, so I try my best to explain what the numbers mean rather than taking a position one way or the other.”
Well-versed in the economics locally and nationally, Grant is originally from Ellensburg, Wash., but has lived and worked in both the United States and Europe.
Cool fact: Grant worked in the Czech Republic from 1996 to 1999 during a time when the country was transitioning from one political and economic system to another.
Watch this Blog for future entries from Grant himself about the economics of our region.
Mar 18 , 2014
We are proud to be a part of powering your future.
On March 13, 1889, Avista, formerly known as Washington Water Power, was incorporated eight months before the Washington Territory became a state. Today, the company is one of only three companies remaining in the state that are classified as Territorial Corporations – incorporated before Washington’s statehood. (See a Video of the presentation.)
The company began on the banks of the Spokane River with the Monroe Street plant, using hydropower to generate electricity for the growing city of Spokane Falls. Today, clean, renewable resources remain a significant part of the company’s diversified mix for energy generation.
Over the generations of providing energy services, one thing has remained constant for our company: We are honored to provide the energy and resources that have helped families and commerce be successful, whether it is in the home, enjoying the outdoors or building successful businesses. We’re proud to call each community we serve “home,” and we’re proud to be your partner in bringing energy for life.
History by Region
Our service territory spans more than 30,000 miles throughout Washington, Northern Idaho, and Oregon. The communities we serve have a rich history that we’re proud to be part of. We’ve captured some of these highlights in our 125th Anniversary Tabloid. You can view it online or download and print. We hope you enjoy this trip down memory lane by region.
Huntington Park in Downtown Spokane to open in May
On May 2, 2014, Avista will celebrate the renovation of Huntington Park, property the company owns along the banks of the Spokane River, just west of Spokane’s City Hall. The renovation and enhancements include work on the walkways, grassy areas and structures to provide residents and visitors greater access to the river and views of the falls.
A new plaza at City Hall will be dedicated that day as a gift to Spokane in celebration of the company’s 125 anniversary. The new plaza will create open-air space for gatherings and river viewing, and includes two water features and a fire feature.
For the first time in more than 100 years, the view of the spectacular lower falls of the Spokane River will be opened up for easy viewing from the park, the plaza or the streets of Spokane.
Learn more about Huntington Park.
Salmon Chief to oversee Huntington Park
Artist Virgil “Smoker” Marchand created an inspirational Native American sculpture – Salmon Chief - to oversee Huntington Park, which will be dedicated in May.
Marchand says the sculpture represents a Native American tradition of a man who was appointed to ensure all area tribes received enough Salmon to make it through the winter.
The Native American sitting atop his horse is raising the salmon like a blessing to the river. The horse and man statute is over 12-feet tall and took more than three weeks to make. Several other pieces will be added to the display in the spring.
Mar 12 , 2014
Why would engineers from Bangladesh come all the way to Spokane? To see Avista’s smart grid upgrades up close and personal, of course.
Members of Bangladesh’s Rural Electrification Board are spending several weeks in Pullman learning about power engineering from Washington State University faculty. Their curriculum includes a field trip to Avista.
They learned about the investments Avista’s made to transform Pullman, Wash into the region’s first “smart city,” toured one of our state-of-the art substations and traveled to Spokane to meet with 3 Avista engineers who are leading our grid modernization projects. They saw first-hand how the switches, sensors and software we’ve installed are improving reliability for customers and enhancing the energy efficiency of our distribution system.
“We are working for the villagers,” said Abdul Aziz, an executive engineer with the Rural Electrification Board. “We are learning methods at WSU that will help us bring the villagers better service and an improved distribution system.”
Our friends from Bangladesh learned a lot from our engineers -- and they’ll bring those lessons home.
We can’t wait to share our knowledge with another group of Bangladesh visitors later this month.