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Avista Requests Recovery of Costs for Providing Natural Gas Service in Oregon

Avista planning to request significant decrease in natural gas commodity rates in fall PGA filing

SPOKANE, Wash., June 25 // -- Avista (NYSE: AVA) has filed a request with the Public Utility Commission of Oregon (PUC) to increase natural gas rates to recover costs for capital projects needed to reliably meet the energy needs of customers and for increases in operating expenses. This is only the third time since Avista began serving its Oregon customers in 1991 that the company has requested a rate increase to recover its costs for delivering natural gas.

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Major capital projects included in the filing are pipeline reinforcement projects throughout Avista's Oregon properties. These projects will increase the capacity and reliability of the distribution system serving Avista's over 95,000 Oregon natural gas customers in Medford, Klamath Falls, Roseburg and LaGrande.

The PUC has up to 10 months to review Avista's filing which requests an average 11.6 percent increase to produce $14.2 million in additional revenue. The request is based on a proposed rate of return on rate base of 8.96 percent, with a common equity ratio of 51.45 percent and an 11 percent return on equity.

If the request is approved, a residential customer using an average of 49 therms per month would see a $9.15 increase, or 12.5 percent, for a revised monthly bill of $82.46.

"We've heard our customers say they are concerned about the price of energy, so we are continuing to aggressively manage our costs. At the same time, we must ensure that we meet the needs of our customers with natural gas service that is safe, reliable and brings with it a high level of customer satisfaction," said Dennis Vermillion, president of Avista Utilities.

Avista has implemented a number of measures to reduce company costs such as hiring restrictions, forgoing salary increases for company officers in 2009 and reducing non-officer salary adjustments, limiting capital projects and cancelling plans to construct additional office space.

Vermillion noted that wholesale natural gas prices have continued to decline since Avista reduced Oregon customer rates by 4.1 percent in November 2008. Vermillion said the company expects to request a significant reduction in natural gas prices when it files an annual purchased gas cost adjustment (PGA) in late August, provided prices remain in the current range. The PGA rate decrease would be effective Nov. 1, 2009, in time for the next heating season. The net result of these two requests is expected to be a decrease in overall rates.

On average about 75 percent of an Avista bill for Oregon customers is the cost of natural gas used by the customer with the remaining 25 percent being the company's costs for providing service.

To help customers with the impact of rising energy prices, Avista offers a number of payment options such as preferred due dates, flexible payment plans, comfort level billing and bill assistance. In addition Avista:

  • Supports Project Share, which provides energy bill payment assistance to qualifying residents regardless of the heating source.
  • Offers Customer Assistance Referral and Evaluation Services (CARES), which provides assistance to special-needs customers through referrals to area agencies and churches for help with housing, utilities, medical assistance and other needs.
  • Provides the Low Income Rate Assistance Program (LIRAP), which collects approximately $230,000 annually through a natural gas tariff surcharge. The funds are distributed by community action agencies in a manner similar to the Federal and State-sponsored Low Income Heating Energy Assistance Program (LIHEAP) to assist customers with their energy bills.

Also to lessen the impact of rising energy prices to customers, Avista offers a number of energy efficiency programs. The programs provide rebates and incentives to residential, commercial, industrial and limited-income customers for implementing qualifying energy efficiency measures in their home or business. Avista helped its Oregon customers save nearly 300,000 therms of natural gas in 2008, which is enough energy to provide space and water heating to over 510 homes for one year.

Avista Corp. is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities is our operating division that provides service to 355,000 electric and 315,000 natural gas customers in three Western states. Avista's primary, non-regulated subsidiary is Advantage IQ. Avista stock is traded under the ticker symbol "AVA." For more information about Avista, please visit www.avistacorp.com.

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

This news release contains forward-looking statements regarding the company's current expectations. Forward-looking statements are all statements other than historical facts. Such statements speak only as of the date of the news release and are subject to a variety of risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the expectations. These risks and uncertainties include, in addition to those discussed herein, all of the factors discussed in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2008, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.

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SOURCE: Avista Corp.

Web site: http://www.avistacorp.com/

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