Saying it had no choice in the face of the skyrocketing wholesale natural gas prices, the Idaho Public Utilities Commission Thursday raised the natural gas rates for Spokane, WA-based Avista Utilities' 66,000 retail customers in the state by an average of 23.8%, effective Tuesday. The $15.2 million rate hike is strictly to cover the utility's increased cost of gas supplies.

With the increase, the average Avista residential or small business customers using 70 therms monthly will pay about $16.36/month more -- going from about $70 to $86.36/month -- a spokesperson for the Idaho PUC said.

"Unfortunately, the commission has no authority over the wholesale price of natural gas, as it is an unregulated commodity subject to regular market forces," a commission spokesperson said. "A public utility such as Avista is obligated to serve all those in its territory who demand service. The law requires that the utility be allowed to recover costs that are prudently incurred in serving its customers."

In taking the action, the Idaho regulators noted that in the past, the purchased gas cost adjustment (PGA) process "was not significant," and some years resulted in rate decreases. They lamented the fact that has not been the case in recent years. Last year, Avista was granted a 14.2% PGA increase, following a 2.5% increase in 2003. In 2002, the PUC noted, Avista received a 15.6% decrease.

While the regulators said in the current case they were satisfied that Avista had taken some initial steps in providing the PUC with evidence that it had "disciplined purchases and hedges without speculation or causing undue risk to customers," but for the future they asked the utility to provide "better documentation of its gas purchasing decisions."

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