Energy rates steady, for now

COEUR d'ALENE - A winter with little snow may have been a relief after two years that set records, but it means power generating dams will have less to work with this summer.

"The Spokane River drainage is at 44 percent of normal," said Dennis Vermillion, president of Avista Utilities. "Obviously, that's not so good."

Other rivers that supply water to Avista hydroelectric dams are also two-thirds or less of normal, with the dam at The Dalles, Ore., at 60 percent. That dam is the indicator for wholesale power prices for the region, and will mean more volatility, Vermillion said.

But the news is not bad for consumers, at least in the immediate future.

"This event will not affect rates," said Scott Morris, Avista Corp. chairman of the board, president and chief operating officer.

The two executives and communications directors for the corporations spoke extensively with The Press on Thursday about the current state of the energy industry and its future.

Natural gas, which will provide 34 percent of Avista's power production growth this decade, is 30 percent lower in price in part due to a decrease in demand, Morris said. January was the eighth warmest recorded, he said. January and February combined were the fourth warmest, Vermillion added.

Heating is by far the largest consumer of energy, followed by heating water and appliances, Morris said. But because the utility has enough reserve capacity to meet the needs of this decade, it has decided not to build any wind farms before 2018.

The cost of electricity from wind generators is 10 cents per kilowatt-hour, compared to 4.5 cents from present sources, Morris said.

Avista expects to spend $209 million this year in capital improvements on everything from trucks to its electric distribution system. Many of its substations are 40 years old or more, 21 percent of power poles 75 years or older and 68 percent of wood power poles 45 or older, Vermillion said.

"Our engineers say we could spend $250 million to $300 million a year," he said.

However, Morris added, anything above $100 million "creates rate pressure."

The public wants cheap, green reliable power, Morris said, and Avista will be looking at a variety of ways to provide that, including cell phone applications that allow for control of home energy usage.

"The ways we go about doing stuff is going to be completely different," he said.