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Avista Sees Natural Gas Prices Mirror Record High Crude Oil Prices
Natural gas prices now 74 percent higher than winter 2007-2008; upcoming winter heating costs will be impacted

SPOKANE, Wash., July 2 // -- A dramatic rise in energy prices are making this year an especially challenging one for Avista as it continues to procure at the best prices possible the natural gas needed to serve customers during the upcoming 2008-2009 heating season. These higher prices will impact customer rates this fall when annual purchase gas cost adjustments (PGA) are filed with the public utility commissions in Washington, Idaho and Oregon.

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Natural gas historically costs less in the spring and summer than other times of the year. Avista takes advantage of the lower seasonal prices to purchase some natural gas at fixed prices for the upcoming heating season and for storage in the company's Jackson Prairie underground storage facility.

Kevin Christie, Avista's director of gas supply, said prices for natural gas have increased significantly over prices seen this past winter and are continuing to climb. In June 2007, natural gas prices averaged $7.39 per dekatherm compared to June 2008 prices of $12.81 per dekatherm. Natural gas prices per dekatherm over the past 12 months are reflected in the chart.

"The combination of an unusually long winter and cold spring created higher demand for natural gas which depleted storage reserves across the country. The influence of record high crude oil prices on natural gas prices and lower natural gas imports into the U.S. are also some of the reasons behind the higher prices," Christie said.

The lack of lower spring and summer prices means natural gas rates for customers will increase when Avista files its annual PGAs in September. PGAs are typically filed once a year to reflect the average cost of wholesale natural gas purchased by Avista to serve its customers. Avista does not make a profit on the cost of gas reflected in the PGA filings.

"Natural gas remains the most efficient fuel for space and water heat, and it produces fewer greenhouse gas emissions than when used to generate electricity," Christie said. "Natural gas is 92-97 percent efficient when it is used directly in a high-efficiency furnace. However, natural gas used to generate electricity that is used in the home for electric heating is only 40 percent efficient."

Avista offers a number of energy efficiency rebates and incentives to help customers better manage their energy use. By upgrading equipment and appliances to more energy efficient models, customers are able to reduce their energy demand and lessen the impact of rising energy costs. Rebate and incentive information for residential, commercial and industrial customers is available at http://www.everylittlebit.com/.

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 352,000 electric and 311,000 natural gas customers in three Western states. Avista's primary, non-regulated subsidiary is Advantage IQ. Our stock is traded under the ticker symbol "AVA." For more information about Avista, please visit http://www.avistacorp.com/. Avista Corp. and the Avista Corp. logo are trademarks of Avista Corporation. All other trademarks mentioned in this document are the property of their respective owners.

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, 2007.

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SOURCE: Avista Corp.

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