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Avista Requests Recovery of Costs for Providing Service in Oregon

Continuing Capital Investments in Infrastructure and Technology Drive Request for Rate Increase

SPOKANE, WA--(Marketwired - May 01, 2015) - Continuing capital investments in natural gas infrastructure and technology led Avista (NYSE: AVA) to file a request today with the Public Utility Commission of Oregon (PUC) to increase natural gas billed rates for customers by an overall 8.0 percent.

The request is designed to produce $8.6 million in additional natural gas billed revenue and is based on a proposed rate of return of 7.72 percent with a common equity ratio of 50 percent and a 9.9 percent return on equity.

If the general rate request is approved by the PUC, a residential customer using an average of 47 therms a month would see a $5.68 a month increase, or 8.9 percent, for a revised monthly bill of $69.33. The revised monthly bill includes a proposed increase in the monthly basic charge from $8.00 to $10.00.

Avista serves approximately 98,000 customers in Oregon. The PUC has up to 10 months to review Avista's request.

"Our general rate requests continue to be driven by the ongoing need to invest in our aging infrastructure and expand and replace the facilities and equipment we use every day to serve our customers. This includes, among other things, increased investment to replace certain natural gas service pipe and other parts of our infrastructure," said Dennis Vermillion, president of Avista Utilities. "We understand that rate increases can be challenging for our customers. We continue to maximize efficiencies throughout the company and manage our costs, while maintaining the safe and reliable delivery of natural gas to our customers."

Capital Investments
Costs to replace facilities and parts of Avista's system are many times more expensive today than when originally installed. Current capital investments include upgrades and maintenance of natural gas pipe and distribution equipment and information technology upgrades. Among the major capital investments in today's filing are:

  • The continuation of a major project to systematically replace portions of natural gas distribution pipe. The project is replacing hundreds of miles of natural gas pipeline that was installed prior to 1987.
  • Completion of a pipeline in southeast Medford to meet current and future natural gas delivery needs.
  • An upgrade to the Ladd Canyon Gate Station that is currently at its capacity, to accommodate growth.

On average, about 50 percent of an Avista bill for Oregon customers is the combined costs of purchasing natural gas on the wholesale market and transporting it to our system for delivery to customers. The remaining 50 percent is related to the ownership and operating costs of Avista's delivery system to provide safe, reliable service to all customers, while meeting mandatory state and federal requirements.

Decoupling
The request also includes a proposed natural gas decoupling mechanism. Decoupling is a mechanism designed to break the link between a utility's revenues and a consumer's energy usage. The company's actual revenue, based on therm sales will vary, up or down, from the level set by the PUC. This could be due to changes in weather, conservation or the economy. Under the proposed decoupling mechanism, the company's natural gas revenues would be adjusted each month to reflect revenues based on the number of customers, rather than therm sales. The difference between revenues based on sales and revenues based on the number of customers will result in either surcharges or rebates to customers in the following year.

Customer Assistance
To help customers proactively manage their energy use, Avista offers a number of energy efficiency programs, energy-saving information, rebates and incentives. Avista also provides energy assistance programs and payment options for qualifying customers. Information about these customer programs and options is available at www.avistautilities.com.

About Avista Corp.
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 electric service to 365,000 customers and natural gas to 325,000 customers. Its service territory covers 30,000 square miles in eastern Washington, northern Idaho and parts of southern and eastern Oregon, with a population of 1.5 million. Alaska Energy and Resources Company is an Avista subsidiary that provides retail electric service in the city and borough of Juneau, Alaska, through its subsidiary Alaska Electric Light and Power Company. Avista stock is traded under the ticker symbol "AVA." For more information about Avista, please visit www.avistacorp.com.

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, 2014.

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