Idaho Public Utilities Commission

Case No. AVU-G-12-01, Order No. 32471

February 29, 2012

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

Avista gas rates decline March 1 with WACOG adjustment

The Idaho Public Utilities Commission is accepting an application by Avista Utilities to adjust the variable portion of its natural gas tariff from 41.8 cents per therm to 36.2 cents, reducing an average residential customer’s bill by about $3.46 per month, or about 5.7 percent. Large commercial customers’ rates will decrease by about 7.3 percent. The rate change becomes effective March 1.

Avista serves about 120,000 electric and natural gas customers in northern Idaho.

The commission approved the application without the full 30-days’ notice required for rate changes and accompanying public comment period so that customers may more immediately benefit from the decrease.

Natural gas utilities file a Purchased Gas Cost adjustment (PGA) at least once a year. The PGA varies largely due to market conditions. (Electric utilities annually file a similar Power Cost Adjustment – PCA – that reflects the variable component of power supply costs.) Increases or decreases to rates as a result of the PGA or PCA do not impact company earnings.

The commodity portion of a natural gas bill is called the WACOG, or Weighted Average Cost of Gas. The commission directs the gas utilities it regulates to amend their WACOG if gas prices materially deviate from the currently approved commodity price. Commission staff compared Avista’s proposed WACOG to the Natural Gas Exchange’s and New York Market Exchange’s futures prices for basins from which Avista gets its gas and believes lowering the WACOG is reasonable.

The WACOG is a significant portion of a customer’s total bill. Beginning March 1, the WACOG will be 36.2 cents of a residential customer’s rate of 85.9 cents per therm. The non-WACOG portion of the 85.9 cents per therm represents costs that are fixed, such as capital investment in infrastructure and operations and maintenance. An Avista residential and small commercial customer uses an average 62 therms per month.

The commission commended the company for promptly seeking to amend its WACOG as market conditions changed.

A full text of the commission’s order, along with other documents related to this case, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Gas Cases” and scroll down to Case No. AVU-G-12-01.