Avista warned that high natural gas prices will show up in customer rates this fall when annual purchased gas cost adjustments (PGA) are filed with the public utility commissions in Washington, Idaho and Oregon.

The company said it uses seasonal arbitrage and storage at its Jackson Prairie facility to hedge physically. Still, Kevin Christie, Avista director of gas supply, said prices have increased significantly over prices seen this past winter and are continuing to climb. In June 2007 gas prices averaged $7.39/Dth compared to June 2008 prices of $12.81/Dth.

“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 gas purchased by Avista. The cost of gas is passed through to customers.

“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% 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% efficient.”

This spring the American Gas Foundation released a study that cited efficiency and environmental statistics and urged greater residential and direct commercial use of natural gas and less reliance on gas for power generation (see Daily GPI, May 2).

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.