Avista rate hikes approved

Avista's residential and small commercial customers will be paying 6.8 percent more for natural gas and .8 percent more for electricity as a result of a rate adjustments approved by the Idaho Public Utilities Commission.

The increases in rates, which are effective Oct. 1, do not increase Avista earnings.

The gas increase is Avista's annual Purchased Gas Cost Adjustment (PGA), which is adjusted up or down at least annually to reflect that portion of gas rates that change from year to year, due to changing market prices and fuel and transportation costs.

"For the average gas customer, the increase is $3.80 per month," said Gene Fadness, IPUC spokesman.

In recent years, lower demand for natural gas, higher production rates and record high storage levels, drove prices to the lowest they've been in a decade.

However, for most of 2013, prices began an upward trend, caused primarily by the late, colder-than-normal winter.

Consequently, Avista must increase that portion of rates that accounts for variable changes from 33.3 cents per therm to 37.4 cents, according to the IPUC. The variable portion of rates accounts for more than half of the total rate of 63.37 cents per therm paid by Avista natural gas customers.

To protect customers from wholesale market swings in gas prices, Avista engages in "hedging," or buying gas while prices are lower and storing it for use during higher-priced periods.

Avista said it will hedge about 38 percent of its estimated annual load requirements for the next PGA year.

As a result of four recent electricity adjustments, including two approved this week by the IPUC, those ratepayers will see a 4.1 percent total increase on Oct. 1. For the average residential electricity user, the bill will increase from $78.69 per month to $81.94.