Case No. AVU-G-07-02, Order No. 30458

November 6, 2007

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




Commission adopts Avista decrease in natural gas rates


The Idaho Public Utilities Commission has approved Avista Utilities’ request to decrease customers’ annual Purchased Gas Cost Adjustment (PGA) by an average 4.6 percent effective Nov. 1. Avista serves about 70,000 households in its northern Idaho territory.


An average resident using about 65 therms per month will get about a $3.65 monthly decrease due to more stability in wholesale gas prices, increased storage capacity and no supply interruptions caused by hurricanes.


Avista’s fixed costs of supplying gas and some variable costs of gas supply are covered in base rates. But variable costs, such as wholesale market prices for gas, transportation and storage are adjusted yearly through the PGA. The PGA does not change the base rates paid by customers nor does it impact company earnings, but it does impact the size of a yearly surcharge or credit to adapt to the always changing costs of buying gas from suppliers and related transportation and storage expenses. Because those costs have stabilized, customers get a credit for the second straight year. During those years when there are PGA surcharges, the money collected from the surcharge does not enhance company earnings but goes directly to pay wholesale suppliers of natural gas or to providers of storage and pipeline capacity.


The commission said Avista’s risk management and hedging policies “have served well to help curb the negative effects of the dramatic volatility in the natural gas market … and significantly reduced the risk of paying higher prices. We are confident that the company will continue to take advantage of lower prices when the opportunity arises.”


A full text of the commission’s order, along with other documents related to this case, are available on the commission’s Web site at Click on “File Room” and then on “Gas Cases” and scroll down to Case Number AVU-G-07-02.