Oct 11 , 2012
If increases are approved, your natural gas rates will still be lower than they were at this time last year
This power pole in Hayden, Idaho, has deteriorated
to the point where it needs to be replaced. We have
over 240,000 distribution poles in our electric system.
Based on a 40-year depreciable life, we would need
to replace approximately 6,000 poles every year.
If our requests are approved and you’re an electric residential customer in Idaho using an average of 930 kilowatt hours per month, you would see an increase of $4.20 per month, or about 14 cents a day, for a revised bill of $82.89. If you’re a natural gas customer using an average of 60 therms per month, you would see an increase of $4.12, or about 14 cents a day, for a revised monthly bill of $56.67. The Idaho Public Utilities Commission has up to seven months to approve our requests, and the increases wouldn’t take effect until sometime next year.
You may be thinking we just heard about a rate decrease, so why an increase? The costs of delivering energy to you safely and reliably continue to rise. We work hard to manage our costs, while making sure you have the reliable energy that you expect, at some of the lowest prices in the Northwest. The good news is we’ve been able to pass savings from lower natural gas prices and power costs through to you with multiple rate decreases, and we hope this will help soften the impact of the rising costs of delivery to your energy bill.
Rates have decreased throughout 2012
Effective Oct. 1, if you are an Idaho customer, you saw decreases in both natural gas and electric rates
because of lower natural gas prices and lower power supply costs, after the Idaho Public Utilities Commission approved our rate decrease requests filed in July. Your rates have decreased your natural gas rates twice this year, dropping them by approximately 12 percent overall. In fact, even if today’s rate increase request is approved, your natural gas rates will still be lower than they were at this time last year – and around what they were 10 years ago. Electric rates have remained fairly flat as well when you adjust for inflation.
We’re maintaining and upgrading our system for you
Maintaining and upgrading our energy-delivery system is ongoing, and costs more with each passing year. It’s a little like taking care of your home or car. You always have maintenance and operation costs, and sometimes you have to upgrade or update old equipment with new. And that’s expensive. For instance, if you remodel your kitchen, new appliances cost much more than the old ones did when they were purchased.
To serve all of our customers in Idaho, Washington and Oregon, Avista has an extensive system that we have to take care of. To do this, we expect to invest approximately $250 million each year for the next three to five years to continue updating and maintaining our system to serve our customers’ energy needs.
Help is available if you’re struggling with bills
We realize in these difficult economic times it can be a struggle for people to meet their basic needs. We offer services for customers such as comfort level billing, payment arrangements and CARES (Customer Assistance Referral and Evaluation Services) representatives. Our CARES reps are specially-trained employees who provide referrals to area agencies and churches for customers with special needs for help with housing, utilities, medical assistance, and other needs. To learn more, visit www.avistautilities.com
Oct 01 , 2012
If you’re an Avista customer in Idaho, we’ve got good news for you just in time for the cooler months of fall and winter. Beginning today and through the winter months, depending on your energy usage, you’ll see lower electric and natural gas rates. That’s because last week the Idaho Public Utilities Commission approved several rate decrease requests
we filed in July.
Rates for our natural gas customers in Idaho have decreased twice this year because of lower wholesale prices. Overall, natural gas rates have dropped by almost 12 percent in 2012.
Today’s decreases are mostly because of lower natural gas prices and lower power supply costs. You might remember we reduced natural gas rates for Idaho customers in March by 6 percent. Like then, abundant supplies of natural gas and lower demand have continued to push wholesale natural gas prices downward. That’s good news. Why? Because we pass those savings directly through to you. The cost of purchasing natural gas on the wholesale market is around 40 percent of your bill, so it makes a difference.
The same can be said for electricity. About 60 cents of every dollar you pay for electricity goes towards generating or purchasing the energy itself. So when power supply costs are lower, it means your bill is a little lower. And every little bit adds up.
Starting today, if you use an average of 939 kilowatt-hours per month, you’ll see your electricity bill decrease $1.09 per month to $79.46. If you are a natural gas customer using an average of 60 therms a month, you will see your bill decrease $3.23 to $52.55 per month.
Sep 25 , 2012
What are public hearings on rates all about?
You may have heard about public hearings for Avista’s current Washington general rate request, which will take place this week in Spokane and Spokane Valley. If you are a Washington customer of Avista, you’ve also received a notice in your bill about the hearings.
These hearings, scheduled by the Washington Utilities and Transportation Commission, are part of the normal general rate case process. Customers can comment on the current request either at the hearings, by mail or online, and we encourage our customers to participate in the process.
The first hearing is scheduled on Sept. 27, from 6-7:30 p.m. in the City of Spokane Council Chambers, 808 W. Spokane Falls Blvd., Spokane. A second hearing is scheduled on Sept. 28, from noon to 1:30 p.m. in the City of Spokane Valley Council Chambers, 11707 E. Sprague Ave., Spokane Valley.
If you can’t make a hearing or prefer to submit your comment in writing, you can do so by writing to: WA UTC / P.O. Box 47250, Olympia, WA, 98504-7250, or comment online at www.utc.wa.gov/comment
Avista filed a request with the Commission on April 2, 2012, seeking to recover costs for investments in upgrading infrastructure to assure the ongoing delivery of reliable energy, along with rising operating and maintenance expenses. Read more about our request in our April Blog post.
If you’ve also heard about requests we’ve made to decrease rates and you want more information, please read our previous blog posts
Sep 17 , 2012
So, there's a gas decrease request and a request for an increase and a . . . well, it's confusing at times. Let us explain.
Question for the day: Have you ever thought about what makes up your natural gas bill?
Other than looking at how much our monthly bill is and maybe how much energy we used the last month, most of us don’t give it a thought.
As an Avista customer, every dollar you pay for natural gas service on average is made up of three different components – the wholesale cost of the natural gas used (41 cents), the cost for transporting that gas from the producer to Avista’s distribution system (13 cents), and the cost for the people, equipment and services needed to deliver that gas to your home (46 cents).
Last Thursday, we asked the Washington Utilities and Transportation Commission (UTC) to allow Avista to decrease natural gas rates for the second time this year by an additional overall 4.4 percent because wholesale natural gas prices continue to decline. You can read more about the request in the news release
If our request is approved by the UTC, the new lower rates would be effective Nov. 1, making Washington residential natural gas rates over 11 percent lower than at the beginning of this year. This requested decrease is in the wholesale cost of gas (41 cents) and fixed transportation (13 cents) portions of your bill.
If you’re a Washington customer, you may have seen an insert in your August energy bill that provides information on a different Avista rate request
called a general rate case. That request was made last April to increase both electric and natural gas rates. So, why are we asking to decrease and increase natural gas rates at the same time?
The natural gas portion of the general rate case is for the delivery portion (46 cents) of your bill – the people, equipment and services needed to safely and reliably deliver natural gas to you. The request to increase natural gas rates by an overall 5.9 percent is to recover increasing costs to operate and maintain the natural gas system. The UTC has up to 11 months from when the request was made to review and issue a decision.
Rates are complex and can be confusing, so we have a short video that gives more information
on the general rate case process. Information on Avista’s general rate case, including upcoming public hearings, is available in the Notice of Request for Rate Increase brochure that was in your August Avista bill. If you missed the insert click this link
to check it out.
Sep 13 , 2012
If approved, new rates would go down 4.4 percent – or 11 percent when combined with March decrease
Good news if you’re a natural gas customer in Washington – your rates could go down for the second time this year thanks to lower wholesale natural gas prices.
We filed a request today asking to reduce natural gas rates in Washington by an overall 4.4 percent. That’s in addition to a 6.4 decrease that was effective March 1 of this year. If the Washington Utilities and Transportation Commission approves our latest request, beginning Nov. 1 residential rates would be over 11 percent lower than at the beginning of this year. You can read more about our request and the drivers in today’s news release
Want to know more?
Check out our special thee-part Avista blog series
that helps explain the sometimes confusing nature of natural gas pricing and find out about the three main drivers of your natural gas energy bill – wholesale gas costs, fixed transportation costs, and equipment and people.
Aug 30 , 2012
When you think about how your electricity is generated you probably think it comes mainly from hydropower
. But did you know that Avista also uses natural gas as a fuel to generate electricity? In fact, it makes up 36% of our company owned electric power plants
. Natural gas generation is a dependable source of energy because the fuel can be stored to generate electricity anytime, and it has about half the carbon emissions of other fossil fuels, such as coal.
Avista and Portland General Electric co-own a combined cycle natural gas plant called Coyote Springs, located in Boardman, Oregon. The plant has 2 main generation units, and Avista owns Unit 2.
A combined cycle plant has a gas turbine and a steam unit all in one. These types of units are considered very efficient because they use the waste heat from the gas turbine to create steam, instead of exhausting it back into the atmosphere.
Unlike a simple cycle gas plant, which can be fired up quickly to meet the electricity generation needs of customers, the combined cycle plant at Coyote Springs is considered a “base load” facility because the natural gas generator needs to run consistently in order to provide heat for the steam generator.
Like a car, there are certain maintenance activities that need to take place after a number of years. This year, unit 2 had its first scheduled major maintenance since the unit went in service in 2002.
The project involves overhauling the natural gas and steam generators in unit 2. From start to finish, the project takes approximately six weeks to complete and a great deal of collaboration and teamwork.
The end result of the maintenance is that Unit 2 at Coyote Springs will continue to have the capacity to generate an average of 280 megawatts of power for our customers – that’s enough electricity for just over 210,000 homes.
Aug 16 , 2012
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.
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)
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
Aug 08 , 2012
How does Avista pass the costs of natural gas through to you? (Hint: we don’t mark it up!)
Click on the above image to enlarge the breakdown
example of a customer's natural gas bill.
You may have heard some good news
Avista shared last week with our Idaho customers. We filed requests with the Idaho Public Utilities Commission to decrease natural gas and electric prices. If the request is approved, this will be the second natural gas price reduction this year in Idaho and natural gas rates will have decreased by more than 14 percent overall in 2012.
If you’re an Avista natural gas customer, you have some of the lowest natural gas rates in the Northwest, and the wholesale natural gas costs in your bill have also dropped significantly in recent years. In fact, through rate decreases proposed by Avista and approved by state regulators, Avista customers have seen the wholesale price of natural gas decrease by almost 50 percent since 2008.
But a 50 percent drop in wholesale prices doesn’t equate to a 50 percent reduction in your natural gas bill, because the rates you pay cover much more than just the wholesale cost of natural gas itself.
In our article last week,”Natural Gas Pricing 101, Part 1: Natural Gas Supply,”
we explained how the combined costs of purchasing natural gas on the wholesale market and having it transported to our distribution system for delivery to you is about 55 percent of your natural gas bill – or 55 cents of every dollar you pay for natural gas. We work hard to keep these costs as stable and low as possible.
Avista customer's have seen the wholesale price of
natural gas decrease by almost 50 percent since 2008.
Let’s break that 55 percent down even further. The wholesale cost of the natural gas itself is about 38 percent of your natural gas bill. Avista does not make a profit on the cost of natural gas that is purchased to meet customer needs. You pay what we pay. Another 17 percent of your natural gas bill is the costs of transporting the natural gas on pipelines from the source or supply basins to our distribution system for delivery to you. While we also don’t mark up or make a profit on transportation costs, they are fixed, and have not declined like the cost of the gas itself has in recent years.
The remaining portion of your bill, about 45 percent, covers 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. 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, and we’ll talk more about that in our next article.
What exactly is a Purchased Gas Adjustment (PGA)?
So how do we pass wholesale natural gas and transportation costs through to you, whether it’s increases or decreases in wholesale prices, or changing transportation costs? We call it a Purchased Gas Cost Adjustment, or PGA.
Our customers love the benefits they get from natural gas, but they don’t want surprises, especially in their energy bills. Imagine if your natural gas prices fluctuated like gasoline prices do. You might see your natural gas rates rise and fall several times in a month.
To keep this from happening, once each year Avista requests an adjustment in the natural gas rates our customers pay, to reflect our actual costs of purchasing natural gas on the wholesale market and transporting it to our system for delivery. These PGA requests to the utility commissions in Washington, Idaho and Oregon are usually made annually in August or September, and the new rates take effect by winter. Additionally, when wholesale prices of natural gas change significantly, we can make requests at other times of the year.
When costs are down, it’s good news for our customers, and we want to pass these price decreases on as quickly as we can. So far in 2012, Avista has filed out-of-cycle PGA requests
with the utility commissions in Washington and Idaho, as well as our regular annual request in Idaho
to reduce natural gas prices. Decreases took effect March 1 for our first requests, and, if approved, a second decrease for Idaho customers will take effect Oct. 1.
In fact, since 2009, Avista has filed 20 PGA requests for our customers; seven in Washington, nine in Idaho and four in Oregon – of those, 14 were to reduce gas prices based on declining wholesale natural gas costs. We expect to file our regular annual PGA requests in Washington and Oregon in the coming months. These changes in natural gas costs and the PGA rate adjustments do not increase or decrease Avista’s earnings and must be approved by state regulatory commissions.
Electric customers benefit
Coyote Springs 2, pictured above, is a natural gas
fired plant that generates electricity for customers.
The declining cost of natural gas also benefits electric customers through lower overall power supply costs. When it costs Avista less to purchase the natural gas we use to fuel our natural gas-fired generation plants, we can pass those savings onto you as well. In the general rate request we filed in Washington state
in April, due in part to declining natural gas prices, we proposed a one-year Energy Recovery Mechanism rebate to reflect the overall decrease in costs to generate electricity for Washington customers. Also, as part of our Idaho requests last week, we proposed a Power Cost Adjustment reduction
for our Idaho customers.
So whether you are an electric or natural gas customer of Avista (or both), you’re seeing the benefits of natural gas abundance and low prices, and you have been for some time. But what does it take to deliver natural gas to your home and provide the service to keep it safe and reliable, and how are the costs of the “the pipes and people” it takes to do that reflected in your natural gas rates? We’ll talk more about that in our next article, “Natural Gas Pricing 101, Part 3: Natural Gas Delivery and Your Bill."
Jul 31 , 2012
Today Avista filed several requests with the Idaho Public Utilities Commission to decrease natural gas and electric prices for our customers in Idaho. If approved, natural gas prices would decrease by an overall 8 percent and electric prices by an overall 2 percent for our Idaho customers beginning Oct. 1. This would be the second natural gas price reduction for our customers in Idaho this year. Read more about these filings in the press release we just issued
Each year, we propose to adjust rates our customers pay so that customers’ bills reflect our actual costs of purchasing natural gas and generating and purchasing electric power. Today’s requested rate reductions are due to, among other things, lower natural gas prices and lower power supply costs, which is good news for our customers. Learn more about Natural gas prices.
You may recall the commission in Idaho approved our request to reduce natural gas rates by an overall 6 percent in March. If today’s requests are approved, natural gas rates will have decreased by more than 14 percent overall for Idaho customers in 2012.
Today’s requests include two electric rate adjustments and two natural gas rate adjustments:
• Avista’s annual Power Cost Adjustment (PCA)
• Avista’s annual Purchased Gas Cost Adjustment (PGA)
• Electric and Natural Gas Energy Efficiency Tariff Rider Adjustments (Tariff Rider)
Post Falls Dam - a hydroelectric
facility in Idaho.
The major portion of an Avista electric customer’s bill, about 60 percent, is the cost of generating or purchasing electricity to meet customer needs. These costs may fluctuate up or down. The proposed PCA rebate would pass through reduced power supply costs during the twelve-month period that ended June 30, 2012.
We also filed a request with the IPUC to reduce the electric Energy Efficiency Tariff Rider Adjustment (Tariff Rider). The Tariff Rider is the rate paid by customers that funds the company’s energy efficiency programs.
The two proposed rate decreases will be offset partially by the expiration of an existing refund rate being passed through to customers.
If today’s requests are approved by the commission, the monthly bill for a residential electric customer in Idaho using an average of 939 kilowatt-hours per month would decrease from $80.55 to $79.46, a decrease of $1.09 per month, or 1.4 percent, beginning Oct. 1.
New gas pipelines being
installed new Highway 95 in
The combined costs of purchasing natural gas on the wholesale market and transporting it to Avista’s system makes up about 55 percent of an Avista natural gas customer’s bill, and these costs fluctuate up and down based on market prices. Avista does not mark these costs up. Read more about this in our Avista Blog series Natural Gas Pricing 101, Part 1: Wholesale Prices.
The annual Purchased Gas Cost Adjustment (PGA) is a true-up that balances the cost of wholesale natural gas purchased by Avista to serve customers with the amount already included in customer rates. Abundant supplies of natural gas and continued soft demand for the commodity have continued to keep wholesale natural gas prices at lower levels over the past year.
Our second natural gas rate request filed with the IPUC is to reduce the natural gas Energy Efficiency Tariff Rider Adjustment (Tariff Rider). Similar to the electric Tariff Rider for energy efficiency, the natural gas Tariff Rider is the rate paid by customers that funds the Company’s natural gas energy efficiency programs.
If our requests are approved, residential natural gas customers using an average of 60 therms a month would see a $4.42, or 7.9 percent, decrease in their monthly rate for a revised monthly bill of $51.36, beginning Oct. 1.
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.