IDAHO PUBLIC UTILITIES COMMISSION

IDAHO PUBLIC UTILITIES COMMISSION

Case No. AVU-G-07-04, Notice of Filing and Comment Deadline

January 28, 2008

Contact: Gene Fadness (208) 334-0339, 890-2712

Commission taking comments on Avista gas plan

The Idaho Public Utilities Commission is taking public comments on Avista Corporation’s plan to meet the demands of its natural gas customers over the next 20 years.

Avista, headquartered in Spokane, serves more than 300,000 natural gas customers in Washington, Oregon and Idaho. There are about 70,000 customers in Idaho from Lewiston north to Sandpoint.

The Idaho commission requires regulated electric and gas utilities to file an Integrated Resource Plan (IRP) that outlines the utilities’ strategies for meeting the demands of customer growth. Part of that plan needs to say where the utility plans to get its electric or gas supply with a goal in mind of securing a least-cost resource mix. The plan must up updated and filed every two years.

Avista projects its customer base in Washington and Idaho will grow by 2.4 percent per year and demand on the company’s natural gas supply will grow by 2 percent annually. The growth rate has dropped since Avista filed its last IRP. Growth is expected to be not as great because of lower than anticipated economic growth and lower use per customer.

If the company were to leave its natural gas supply at the same level, it would begin to experience shortfalls in gas supply on days of peak demand in the years 2014 and 2015. To prevent those shortages, Avista plans to competitively acquire natural gas supply and reduce its exposure to short-term price volatility in the natural gas market by using a number of tools including financial hedging and storage. A utility’s exposure to price volatility is reduced when it “hedges” against risk by contracting with suppliers to buy future natural gas supply at a fixed price and then store it for future use. Avista has a diversified portfolio of its own storage and it also contracts with other firms for storage. It owns firm capacity rights on five pipelines and has commodity purchase contracts from several supply basins.

A portion of Avista’s long-range plan is devoted to reducing demand through residential space and water heating efficiency programs. In Washington and Idaho, demand-side measures are targeted to reduce demand by more than 1,425,000 therms in the first year.

To reduce the need to build more infrastructure, Avista will consider structured transactions with neighboring utilities and other market participants that leverage existing regional infrastructure.

Copies of Avista’s plan are available for public inspection at the Idaho offices of Avista. The plan can also be viewed online on the commission’s Website at www.puc.idaho.gov. Click on the gas icon, then on “Open Gas Cases,” and scroll down to Case No. AVU-G-07-04.

The commission will take comments through March 14. Comments 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 above and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.