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Natural Gas and Power Costs

About natural gas rate changes

Your energy rates pay for two kinds of costs: the cost of the energy and the cost of delivering and serving customers.

For electricity, 60 percent of your bill is the cost of energy itself—the cost of generating or purchasing electricity – that’s about 60 cents of every dollar you pay for electricity. 40 percent – or the remaining 40 cents of every dollar you pay – covers the cost of delivering that energy, serving our customers and energy conservation.

For natural gas, the combined costs of purchasing natural gas on the wholesale market and transporting it to our 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 have purchasing plans and decades of experience to help keep these costs as stable as possible.

From time to time, 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. These requests to the utility commissions in Washington, Idaho and Oregon, called Purchased Gas Cost Adjustments (PGA) for natural gas, and Power Cost Adjustments (PCA) for electric power, are usually made annually in the fall, but can be made at other times during the year as well. When costs are down, this is good news for our customers, and we want to pass these price decreases on to them as quickly as we can.

In 2012, we filed PGA requests with the utility commissions in Washington and Idaho to reduce overall natural gas prices by 6.4 percent and 6.0 percent respectively. The utility commissions in both states quickly approved Avista’s requests to lower natural gas rates because of declining wholesale prices, and these took effect March 1.

Natural Gas Power Costs

Washington Customers

We filed our annual PGA request in Washington September 13, 2012. The Washington Utilities and Transportation Commission approved our request to reduce natural gas rates in Washington by an overall 4.4 percent.

This was also the second rate reduction for our natural gas customers in Washington in 2012 because of lower wholesale prices. Overall, natural gas rates in Washington dropped by about 11 percent in 2012.

Effective November 1, if you are a residential customer in Washington using an average of 68 therms per month, you saw a decrease of $2.58 per month primarily due to lower wholesale natural gas prices.

Idaho Customers

On July 31, 2012 we filed our annual PGA and PCA requests with the Idaho Public Utilities Commission. The commission approved the majority of these rate decreases and they took effect October 1, 2012.

If you include the 6 percent natural gas rate reduction for Idaho customers in March 2012, rates for our natural gas customers in Idaho decreased twice because of lower wholesale prices. Overall, natural gas rates dropped by almost 12 percent in 2012. The decreases are mostly because of lower natural gas prices and lower power supply costs.

Starting October 1, if you use an average of 939 kilowatt-hours per month, your electricity bill decreased $1.09 per month primarily due to lower wholesale natural gas prices. If you are a natural gas customer using an average of 60 therms a month, your bill decreased $3.23.

Oregon Customers

On October 12, 2012 we filed an updated PGA request with the Public Utility Commission of Oregon (PUC), asking for an overall decrease of 8.2 percent in natural gas rates. The PUC approved our requests on October 31, 2012.

Included in the filing are the costs and savings related to Avista’s purchase of the Klamath Falls Lateral, a 15-mile, 6-inch transmission pipeline that interconnects with Gas Transmission Northwest to transport gas to our customers in Klamath Falls. We expect this purchase to save customers approximately $1 million annually beginning in January 2013. We also made two administrative filings with the PUC related to demand side management and intervener funding.

If you are an Avista natural gas customer, you saw two separate rate adjustments as a result of this PGA filing.

If you are a residential customer using an average 47 therms a month, your bill decreased by $4.78, for a revised monthly bill of $57.22 beginning November 1, 2012. You saw an additional decrease of $0.50, beginning January 1, 2013, for a total decrease of $5.28 and a revised monthly bill of $56.72.

For more information on these filings and costs, read our blog post.

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