Spokane, WA-based Avista Utilities asked Oregon regulators last Thursday for a better-than 10% hike in its retail residential natural gas utility rates, reversing a trend in recent years in which retail gas utility rates in the state had been plummeting (see Daily GPI, Nov. 1, 2011).
If the Oregon Public Utility Commission (PUC) grants Avista's request, rates overall will climb by 9.8%, and residential rates will increase by 10.6% or more, with an average bill hitting more than $64/month, up more than $6 monthly.
Avista tied its latest request to new capital investments to update its natural gas pipeline system and enhance its technological support.
"More than 90% of the request for rate relief comes from the need to expand and replace the facilities we use every day to serve our customers," said Dennis Vermillion, president of Avista Utilities. "This includes, among other things, increased investment to replace certain natural gas service pipe and to update the technology that is the backbone of our customer information system. These investments will allow for the continued safe and reliable delivery of natural gas to our customers."
The combination utility's request for its gas utility system in Oregon would generate about $9.5 million in additional annual revenue. Avista asked for a 7.83% rate of return and a 50-50 debt-equity ratio, along with continuing its current 10.1% return on common equity.
A PUC spokesperson said the three-member regulatory commission has 10 months to analyze the utility request and make a decision. Avista's last general rate change was in 2010.
As one of three Northwest states in which it operates, Oregon has 96,700 Avista gas utility customers in the southwestern and northeastern parts of the state.
On average, about 55% of an Avista bill for Oregon customers is the combined costs of purchasing natural gas on the wholesale market and transporting it to the Avista system for delivery to customers, a utility spokesperson said. The remaining 45% is related to Avista's ownership and operating costs for assuring the utility gas delivery system is safe and reliable, meeting more stringent state and federal requirements.
Following the Oregon PUC process, Avista expects to make its annual Purchased Gas Adjustment (PGA) filing by Aug. 30 as part of a yearly effort to balance the actual cost of wholesale gas purchases with the amount covered in rates. The PGA filing is separate from the general rate request and has no impact on company earnings, the utility spokesperson said.