Idaho Public Utilities Commission

Case No. AVU-G-10-03, Order No. 32102 and AVU-E-10-04, Order No. 32100

October 28, 2010

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

Reductions in size of credits mean increases for Avista customers

A reduction in the size of two rate credits that customers of Avista Utilities receive will mean a net increase for both electric and gas customers effective Nov. 1. Neither of the adjustments increases Avista’s net earnings.

The Idaho Public Utilities Commission has approved a reduction in the size of the annual Purchased Gas Cost Adjustment (PGA) credit that will increase gas rates by an average 4.5 percent, or about $2.53 a month for a customer who uses the company average of 63 therms per month.

Avista’s weighted average cost of gas is decreasing from about 49.1 cents per therm to 45.8 cents because of a continued decline in wholesale gas prices. However, the credit customers got last year – 22 percent – is substantially larger than the reduced WACOG this year, resulting in a net increase for customers. Avista’s annual Purchase Gas Cost Adjustment (PGA) goes up or down each year depending on the year’s wholesale gas and transportation prices.

The second adjustment is the result of a settlement between the Bonneville Power Administration and Avista regarding the size of a credit the BPA gives to residential and small-farm customers of investor-owned utilities in four Northwest states. The commission has no role in determining the size of the credit.

Effective Nov. 1, the credit is reduced from 0.289 cents per kWh to 0.147 cents per kWh. For a residential customer whose electrical consumption is the company’s average, the result of the reduced credit is about a $1.42 per month increase.

A 2007 federal court decision reallocated much of the credit to customers of publicly owned utilities, after the court determined that customers of investor-owned utilities, like Avista, have been overpaid during the most recent years the credit had been in place. The settlement reduces the credit to comply with that ruling and also to settle some outstanding accounts Avista had with BPA.

BPA is a not-for-profit federal agency that markets power from 31 federal hydroelectric dams and a nuclear plant in the Northwest. The 1980 Northwest Power Act required that residential and small-farm customers in the Northwest share in the benefits of the federal hydroelectric projects located in the region. Avista applies the benefits it receives, which usually fluctuate annually, to customers as a credit on their monthly electric bill.

A full text of the commission’s orders, along with other documents related to these cases, is available on the commission’s Web site at www.puc.idaho.gov For the GPA gas case, click on the gas icon and then on “Open Gas Cases” and scroll down to Case No. AVU-G-10-03. For the BPA credit case, click on the electric icon, then on “Open Electric Cases” and scroll down to Case No. AVU-E-10-04.