Gas Pains

Natural gas is cheap as ever, so why is Avista trying to raise rates and cancel rebates?

Gas Pains
Young Kwak
Avista says its infrastructure is aging.
If Avista Utilities gets its way, anyone with a utility bill for natural gas service will fork over about $4.23 more per month, about a 7 percent increase of what they pay now.

With about 149,154 such households in Eastern Washington, it’s not just spare change. If the rate increase is approved by regulators, Avista would collect about $10 million.

“We have some concerns about the size of the request,” says Lisa Gafken, an assistant attorney general with the state’s Public Counsel Section. “We’re not really excited about it.”

Avista’s rate request comes as America finds itself in the midst of a natural-gas boom, driven by huge deposits found in North Dakota, as well as pockets in Texas, Wyoming and Pennsylvania.

“All this shale crude oil that’s being found has driven natural gas supplies to record highs,“ says Ben Brockwell, director of data, pricing and information services with Oil Price Information Service. “[There’s] so much natural gas in the U.S. that they’re actually burning it into the environment, they’re flaring it, because they’ve got no place to put it.”

Barring any catastrophic earthquakes or a blanket ban on fracking — the controversial extraction method used on shale deposits — natural gas should stay cheap for the next four to 10 years, according to Brockwell.

“I definitely think natural gas is going to stay much more competitive for a while,” he adds.

Dan Kolbet says things aren’t so simple. Each change Avista asks for is tied to a different issue, according Kolbet, the company’s communications manager. The company needs the $10 million to pay for the rising costs of maintaining infrastructure like the company’s distribution pipelines. Avista, for instance, is in the process of replacing virtually all the gas pipelines beneath the town of Davenport, Wash., Kolbet says.

“If we said we’re not going to touch rates … we’re leaving something in the ground that’s not safe,” he says.

Also, bringing all this cheap natural gas to the Inland Northwest isn’t easy because new gas deposits are all over the country.

“The cost of the gas might be going down, but [the gas is] in a lot of different places,” Kolbet says. “The transportation cost is going up.”

Ask a senior what they think about gas line replacements in Davenport and they might just ask you how they’re suppose to squeak by each month on Social Security.

“I can tell you that a 7 percent rate hike to an older individual’s gas bill could be a pretty hard hit, given the economic climate, given the dwindling retirement savings and home values,” says David Irwin, the Idaho spokesman for AARP, a nonprofit that advocates for people over 50.

An AARP survey of Idahoans earlier this year reported that nearly half of all those over 50 found it “extremely difficult” to pay their electric and gas bills.

“Any fluctuation in the monthly budget can have dire impact,” Irwin says.

Avista’s proposed rate hike isn’t the only potential bad news for customers. The company is also asking both Washington and Idaho regulators to end rebate programs for people buying energy efficient furnaces and water heaters. Kolbet says that it doesn’t make sense for the company to give rebates when gas prices are going down.

This doesn’t enthuse green-energy advocates.

“Our opinion is that we really believe that Avista should continue the incentives to allow people to make improvements to their home,” says Kellie Stickney of Sustainable Works, a Washington nonprofit focusing on green energy.

The rebates don’t just replace gas-guzzling clunker furnaces; they also stimulate the economy, according to Stickney. Beyond providing sales for local stores and work for appliance installers, the products that Sustainable Works endorses are made in America, Stickney says.

“Efficient energy is absolutely crucial in our current economy,” she adds.

If Avista can prove that there’s no economic benefit for the company to offer energy efficient rebates, the Idaho Public Utilities Commission will likely allow them to stop, says Gene Fadness, spokesman for the commission. The Idaho PUC could approve or deny the request as early as late August. The Washington Utilities and Transportation Commission will decide whether to approve Avista’s rate hike request by next March.

Gafken, the assistant attorney general, wouldn’t comment on the specifics of Avista’s rate-hike request because the Public Counsel Section is still reviewing it. But she says the public will have a chance to vent. The Public Counsel Section has scheduled public comment meetings: one at 6 pm on Sept. 27 at Spokane City Hall, the other at noon on Sept. 28 in Spokane Valley Council chambers.

Kolbet, the Avista communications manager, adds that the company is trying to pass along what they’re saving with cheaper natural gas. Earlier this year, regulators approved a separate request to lower natural gas rates. Customers saved some money there, though the decrease would be wiped out — and then some — by the new rate hike proposals.

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