20040803Press Release.pdf

IDAHO PUBLIC UTILITIES COMMISSION
Case No. A VU-04-, Order No. 29554
July 30,2004
Contact: Gene Fadness [phone]
Website: www.puc.state.id.
Avista seeks 14.2 percent increase to pay for wholesale gas
Boise - The Idaho Public Utilities Commission will take comments through Aug. 26 on A vista
Utilities' application to increase its purchased gas cost adjustment (PGA) rate by 14.2 percent.
An average monthly residential bill of about 70 therms per month of use would increase by about
$8.21 if Avista s application were approved.
The PGA is typically an annual adjustment that reflects the above- or below-normal costs the
company incurs buying gas for its customers from the wholesale market. The revenue raised
from the proposed increase - about $7.8 million - does not increase Avista s profits. It is used to
pay A vista s natural gas suppliers.
A vista, which serves 60 000 northern Idaho customers, has a separate application before the
commission to increase its permanent base rate by 7.8 percent. Unlike the PGA, which covers
only gas purchase costs, the base rate covers all of the company s costs of providing service. The
base rate application now before the commission is Avista s first base rate request since 1989.
The PGA annually adjusts rates upward or downward depending on the wholesale price of gas.
When wholesale natural gas prices are above normal, customers receive a surcharge. When gas
prices are below normal, customers get a credit.
Up until about five years ago, it was not unusual for customers to have as many years of PGA
credits as there were years of surcharges. For example, from 1993 through 1997, Avista
customers received credits ranging from 0.72 percent to 17.8 percent. Beginning in 1998 - with
the exception of2002 when customers got a 19.8 percent credit - all of the purchased gas cost
adjustments have been surcharges ranging from 0.5 percent to 37 percent, reflecting the volatile
gas market of recent years.
The commission s job is to ensure Avista s gas purchases were "prudently incurred " meaning
that the company timed its buying decisions through hedges and other methods to secure the
least expensive natural gas available. If the company is found to have been prudent in its gas cost
purchases, Idaho statute requires that the company be reimbursed the reasonably incurred
expenses necessary to serve its customers.
A vista is requesting that the PGA be implemented at the same time as the change in the base
rate, which is intended to be effective by Sept. 9.
Persons wishing to submit comments can do so via e-mail by accessing the commission
homepage at www.puc.state.id.and clicking on "Comments & Questions." Fill in the case
number (A VU-04-2) and enter your comments. Comments can also be mailed to P.O. Box
83720, Boise, ill 83720-0074 or faxed to [phone].
A full text of the commission s order, along with other documents related to this case, are
available on the commission s Web site. Click on "File Room" and then on "Electric Cases" and
scroll down to the case number.
END