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Rate increase request suspended

| April 15, 2010 9:00 PM

Commission begins processing Avista case The Idaho Public Utilities Commission has suspended for up to six months a request by Avista Utilities to increase its electric rates by 14 percent and natural gas rates by 3.6 percent.

Commission begins processing Avista case

The Idaho Public Utilities Commission has suspended for up to six months a request by Avista Utilities to increase its electric rates by 14 percent and natural gas rates by 3.6 percent.

The company seeks to increase its annual revenue by $32.1 million and is asking for an overall rate of return of 8.55 percent and a return on equity of 10.9 percent.

The suspension is routine procedure for the commission in major rate cases to allow the commission's staff of auditors, engineers and attorneys time to thoroughly investigate Avista's application.

If the increases were granted in full, the bill of an average residential electric customer (964 kilowatt-hours per month) would increase by $11.40. The gas increase would be about $2.77 per month for a residential customer who uses 63 therms per month.

Avista claims the increases are necessary because of escalating power supply costs, increased costs to meet new federal requirements that ensure reliability, and the need to replace aging infrastructure.

Power supply contracts that provide Avista customers with about 100 average megawatts, about 10 percent of the company's entire retail load, expire at the end of this year. The power provided by these contracts is about 3 cents per kilowatt-hour, which is well below the cost to replace that power, according to Avista president and CEO Scott Morris. Avista's average cost of resources is now about 4.3 cents per kWh. The additional cost to replace the expiring contacts will be about $10 million, according to Avista.

Also included in this case are about $21 million in costs related to a power purchase agreement with the owners of the Lancaster natural gas generating station near Rathdrum. About 80 percent of Avista's requested increase is attributable to the Lancaster agreement, termination of the low-cost power contracts and increased customer load.

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