September 29, 2005

Contact: Gene Fadness (208) 334-0339 office; (208) 841-1107 cell

Commission sets comment deadline, public workshop in Avista case

Customers of Avista Utilities have until Oct. 20 to comment on the company’s proposed 23.8 percent average increase in gas rates. Staff of the Idaho Public Utilities Commission will also present a public workshop on the company’s proposal on Oct. 11 in Coeur d’Alene.

Avista is seeking an increase of $15.7 million in annualized revenues to reflect changes in the wholesale cost of gas purchased by Avista to serve its 66,000 north Idaho customers. The increase goes directly to pay Avista’s gas suppliers and does not increase company earnings.

If approved, an average residential and small-business customer who uses 70 therms a month would see an increase of about $16.36 per month, from about $70 per month to $86.36

The commission uses a yearly mechanism, called the Purchased Gas Cost Adjustment (PGA) that allows the company to adjust rates to reflect changes in the costs for purchases of gas from the wholesale market. The costs include transportation and storage.

Before the wholesale gas market became so volatile in recent years, the annual PGA adjustment was not significant and, during some years customers, got decreases. That has not been true in recent years with the rapidly increasing cost of natural gas. In the past year, natural gas prices have more closely followed the price of crude oil and both are at historically high levels. In 2004, the company received a 14.2 percent increase in its PGA on top of a 6.38 percent base rate increase. In 2003, the PCA was increased 2.5 percent, but in 2002 customers got a 15.6 percent decrease.

The effects of the recent hurricanes in the Gulf Coast are not reflected in this year’s PGA.

Avista proposes to increase the component of customer bills related solely to gas purchase costs from the current 55.7 cents per therm to 76.8 cents. The company also proposes to increase its amortization rate from 3.1 cents per them to 5 cents. The amortization rate is a refund or surcharge to customers to reflect the difference between what the company projected gas rates would be during the year and the actual rate. Combined, the increase for cost of gas and the amortization rate will bring the average residential per therm rate from 95.3 cents to slightly more than $1.18 per therm.

Avista is requesting the increase become effective Nov. 1.

During the Oct. 11 workshop, commission staff will present information about the company’s application and the PGA process. Customers will also be allowed to ask questions of commission staff. The workshop is presented by commission staff, not by the company, although representatives of Avista may be on hand to answer questions. The workshop begins at 7 p.m. in the Driftwood Bay Room of the Student Union Building at North Idaho College, 1000 W. Garden Ave.

Comments, which can be filed through Oct. 20, are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions." Fill in the case number (AVU-G-05-02) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.

A full text of the commission’s order, along with other documents related to this case, are available on the commission’s Web site. Click on “File Room” and then on “Gas Cases” and scroll down to the above case number.