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Avista Requests Price Adjustments in Oregon and Washington
The cost to power a home continues to rise, regardless of the type of fuel a customer uses.

SPOKANE, Wash., Aug. 31 // -- Avista (NYSE: AVA) today filed three requests with the Washington Utilities and Transportation Commission (WUTC) and one request with the Oregon Public Utility Commission (OPUC) to adjust customer rates in the respective states. The requested changes are driven by increasing costs associated with meeting the growing electric and natural gas demands of customers, as well as by an electric rate decrease in Washington from the Residential Exchange Program with the Bonneville Power Administration (BPA).

(Photo: http://www.newscom.com/cgi-bin/prnh/20040128/SFW031LOGO )

"We remain diligent in our effort to provide customers with the lowest priced energy possible. We do this by upgrading our infrastructure to get the most production and efficiencies as possible and by focusing our natural gas purchases in a way that helps mitigate the volatility in the current energy market," said Scott Morris, Avista Corp. president and chief operating officer and president of Avista Utilities.

"We are sensitive to the impact any price increase has on our customers, especially on those who have the most difficulty paying their energy bill," Morris said. "In spite of our hard work to keep customers' costs as low as possible, the cost to power a home continues to rise, regardless of the type of fuel a customer uses. This is a result of many factors, including today's global energy environment."

Washington Electric Filings

Avista has requested to increase electric rates for its Washington customers by an average of 8.8 percent, which is intended to increase revenues by $28.9 million. The proposed increase, referred to as a Production/Transmission Update (P/T Update), includes an update to those production and transmission costs that are part of the Energy Recovery Mechanism (ERM), a mechanism that tracks changes in actual production and transmission costs over time. This filing is similar in scope to the power cost only rate case (PCORC) filings that are made periodically by Puget Sound Energy to update power costs.

Avista is not requesting an increase in rates related to cost changes associated with administrative and general expenses, operation and maintenance expenses, or the cost of equity and capital structure. In this filing, however, Avista is proposing to flow through to customers the lower cost of debt the company is experiencing since the last general rate case.

Included in the P/T Update are investments to upgrade several of Avista's hydroelectric generating units to increase their efficiency and the continued upgrades to Avista's 230-kilovolt high voltage transmission system to increase reliability and transmission capability to serve growing customer demand. Also contributing to the need for the P/T Update are higher operating costs for purchasing and generating electricity to serve Avista's customers.

If the proposed electric rate change is approved by the WUTC, an Avista residential customer in Washington using an average of 1,000 kwh per month can expect to see an average increase of $5.80 per month for a total monthly bill of $65.96.

The filing proposes that new rates become effective on or before February 1, 2007.

In a separate filing today, Avista requested WUTC approval for an average 1.7 percent, or $1.02, per month decrease to residential electric rates to be effective Nov. 1, 2006. The decrease results from an increased amount of credit received from the BPA Residential Exchange Program. The program provides residential and small farm customers in the Northwest a share of the benefits associated with federal hydroelectric projects.

Washington and Oregon Natural Gas Filings

Avista also filed annual purchased gas cost adjustments (PGAs) today with Washington and Oregon utility commissions requesting overall natural gas price increases of 8.1 percent in Washington, or $16.7 million in annual revenues, and 8.8 percent, or $11.0 million, in Oregon. Avista's filings propose an effective date of Nov. 1, 2006, in both states.

If approved by the respective commissions, a Washington customer using an average of 70 therms of natural gas per month can expect to see an average increase of $6.90 per month for a total monthly bill of $93.55. An Oregon customer using an average of 52 therms per month can expect to see an average increase of $6.64 per month for a total monthly bill of $81.70.

PGAs are filed each year to reflect changes in the cost of natural gas purchased by the company to serve its customers. As a gas distribution company, Avista does not profit from these higher gas commodity prices because they are passed through directly, without markup, to consumers.

Avista's requested PGAs reflect higher wholesale natural gas prices caused by a tight balance between growing demand for and available supply of natural gas across North America. They also reflect substantial increases in the rates charged by the two interstate pipeline companies that deliver gas to Avista's distribution system.

Avista employs strategies to mitigate the impact of wholesale market price volatility on its customers' energy bills. These strategies include, but are not limited to, natural gas storage, hedging strategies and energy conservation.

"Avista continues to offer a number of programs to assist our customers in managing their energy bills," Morris said. "I encourage our customers to visit http://www.avistautilities.com/ or call us at (800) 227-9187 for information on Avista's energy assistance programs, conservation tips and bill payment plans."

Avista is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities is a company operating division that provides service to 339,000 electric and 298,000 natural gas customers in three western states. Avista's non-regulated subsidiaries include Avista Advantage and Avista Energy. Avista Corp.'s stock is traded under the ticker symbol "AVA." For more information about Avista, please visit http://www.avistacorp.com/.

NOTE: Avista Corp. and the Avista Corp. logo are trademarks of Avista Corporation.

This news release contains forward-looking statements, including statements regarding expected rates, costs and demand for electricity and natural gas. Such statements are subject to a variety of risks, uncertainties and other factors, most of which are beyond the company's control, and many of which could have a significant impact on the company's operations, results of operations and financial condition, and could cause actual results to differ materially from those anticipated.

For a further discussion of these factors and other important factors, please refer to the company's Annual Report on Form 10-K for the year ended Dec. 31, 2005 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2006. The forward-looking statements contained in this news release speak only as of the date hereof. The company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances that occur after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the company's business or the extent to which any such factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

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SOURCE: Avista Corporation

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