Avista Makes Annual Price Adjustment Filings in Idaho

Rhea-AI Summary

Avista (NYSE: AVA) has filed annual rate adjustments with the Idaho Public Utilities Commission, proposing decreased electric and natural gas prices for customers. If approved, electric revenues would decrease by 5.4% ($16.6 million) effective Oct. 1, 2024, and natural gas revenues would decrease by 25.8% ($29.8 million) effective Nov. 1, 2024.

For residential customers, this translates to an average monthly bill decrease of $2.72 (2.6%) for electricity and $18.66 (23.9%) for natural gas. The adjustments include changes in Power Cost Adjustment (PCA), Fixed Cost Adjustment (FCA), and Purchased Gas Cost Adjustment (PGA). These filings have no impact on Avista's earnings and are subject to public review and Commission approval.

Positive

• Proposed decrease in electric revenues by 5.4% ($16.6 million)
• Proposed decrease in natural gas revenues by 25.8% ($29.8 million)
• Average monthly bill decrease of 2.6% for residential electric customers
• Average monthly bill decrease of 23.9% for residential natural gas customers
• Lower power supply costs due to decreased wholesale electric and natural gas prices

Negative

• None.

Insights

Financial Analyst

Avista's annual price adjustment filings in Idaho, while impactful for customers, have no direct effect on the company's earnings. This is a important point for investors to understand. The proposed changes primarily reflect fluctuations in power supply costs and usage patterns, which are passed through to customers via established regulatory mechanisms.

The most significant aspect of these filings is the substantial decrease in natural gas revenues by $29.8 million or 25.8%. This large reduction is primarily driven by lower wholesale natural gas prices, which Avista passes on to customers without markup. While this doesn't impact profits directly, it could potentially lead to increased natural gas consumption due to lower prices, benefiting Avista in the long term through increased infrastructure utilization.

On the electric side, the proposed $16.6 million or 5.4% decrease in revenues is less dramatic but still significant. The reduction in power supply costs, reflected in the Power Cost Adjustment (PCA), indicates efficient management of Avista's power procurement strategy in a favorable market environment.

The Fixed Cost Adjustment (FCA) increases for both electric and gas services suggest that actual customer usage in 2023 was lower than the baseline established in the last rate case. This mechanism protects Avista's revenue stability, which is positive for investors, as it reduces the company's exposure to fluctuations in energy consumption.

Overall, while these adjustments don't directly impact Avista's bottom line, they demonstrate the company's ability to navigate changing market conditions and maintain stable earnings through regulatory mechanisms. This stability is likely to be viewed favorably by risk-averse utility investors.

Energy Market Analyst

The proposed rate adjustments by Avista reflect significant shifts in the energy market landscape. The substantial decrease in natural gas prices, leading to a 25.8% reduction in gas revenues, is particularly noteworthy. This dramatic drop indicates a continued abundance of natural gas supply, likely due to sustained high production levels and potentially mild weather conditions that reduced demand.

On the electricity side, the 7.4% decrease in the Power Cost Adjustment (PCA) suggests that wholesale electricity prices have also been favorable for Avista. This could be attributed to a combination of factors, including lower natural gas prices (as gas often sets the marginal price for electricity), increased renewable energy penetration and potentially favorable hydro conditions in the Pacific Northwest.

The divergence between the magnitude of gas and electricity price decreases (25.8% vs 5.4%) is interesting. It suggests that factors beyond fuel costs are influencing electricity prices, such as transmission constraints, capacity markets, or renewable energy policies.

Looking ahead, investors should monitor how these price decreases might affect consumption patterns. Lower prices could stimulate demand, particularly for natural gas, which might lead to increased infrastructure utilization. However, this could also pose challenges for Avista's energy efficiency programs, as lower prices reduce the financial incentive for conservation.

The energy market dynamics reflected in these rate adjustments underscore the importance of Avista's diverse energy portfolio and its ability to adapt to changing market conditions. This flexibility is important in the rapidly evolving energy landscape and should be viewed positively by investors focused on long-term utility sector trends.

Lower electric prices effective Oct. 1, 2024 and lower natural gas prices Nov. 1, 2024, if approved.

SPOKANE, Wash., July 31, 2024 (GLOBE NEWSWIRE) -- Avista (NYSE: AVA) has made annual rate adjustment filings with the Idaho Public Utilities Commission (IPUC or Commission) that, if approved, are designed to decrease overall electric revenues by approximately $16.6 million or 5.4% effective Oct. 1, 2024 and decrease overall natural gas revenue by approximately $29.8 million or 25.8% effective Nov. 1, 2024. These annual filings have no impact on Avista’s earnings.

Electric Adjustment Filings
Two annual electric adjustments were filed, that if approved, are designed to change overall electric revenues effective Oct. 1, 2024 as follows:

1. Power Cost Adjustment (PCA): a decrease of approximately $22.8 million or 7.4%
2. Fixed Cost Adjustment (FCA): an increase of approximately $6.2 million or 2.0%

Natural Gas Adjustment Filings
Two annual natural gas adjustments were filed, that if approved, are designed to change overall natural gas revenues effective Nov. 1, 2024 as follows:

1. Purchased Gas Cost Adjustment (PGA): a decrease of approximately $32.3 million or 27.9%
2. Fixed Cost Adjustment (FCA): an increase of approximately $2.5 million or 2.1%

Customer Bills Resulting from these Filings
If the electric PCA and FCA filings are approved, residential electric customers in Idaho using an average of 927 kilowatt hours per month would see their monthly bills decrease from $104.18 to $101.46, a decrease of $2.72 per month, or approximately 2.6%. The proposed electric rate change would be effective Oct. 1, 2024.

The net effect, on an annual revenue basis, for the requested electric rate changes by rate schedule are as follows:

Residential Service - Schedule 1		-2.7%
General Service - Schedules 11 & 12		-7.2%
Large General Service - Schedules 21 & 22		-6.3%
Extra Large General Service - Schedule 25		-10.7%
Extra Large General Service - Schedule 25P		-11.7%
Pumping Service - Schedules 31 & 32		-5.5%
Street & Area Lights - Schedules 41-49		-1.8%
Overall		-5.4%

If the natural gas PGA and FCA filings are approved, residential natural gas customers in Idaho using an average of 64 therms per month would see their monthly bills decrease from $78.03 to $59.37, a decrease of $18.66 per month, or approximately 23.9%. The proposed natural gas rate change would be effective Nov. 1, 2024.

The net effect, on a revenue basis, for the requested natural gas rate change by rate schedule are as follows:

General Service - Schedule 101		-24.3%
Large General Service - Schedules 111 & 112		-31.6%
Interruptible Service - Schedules 131 & 132		0.0%
Transportation Service - Schedule 146		0.0%
Overall		-25.8%

Power Cost Adjustment (PCA)
The PCA is an annual rate adjustment made to reflect the difference between the actual cost of generating and purchasing electric power to serve customers and the cost currently included in customer rates. Over the last year, power supply costs were lower than those included in retail rates due to lower wholesale electric and natural gas prices.

Fixed Cost Adjustment (FCA)
The electric and natural gas FCA is a mechanism designed to break the link between a utility’s revenues and customers’ energy usage. Avista’s actual revenue, based on kilowatt hour or therm sales, will vary, up or down, from the level included in a general rate case and approved by the Commission. This could be caused by changes in weather, energy conservation or other factors. Under the FCA, Avista’s revenues are adjusted each month based on the number of customers. The annual difference between revenues based on sales and the number of customers is surcharged or rebated to customers beginning in the following year. The proposed FCA rate adjustments are primarily driven by variations in 2023 customer usage related to weather and savings from participating in efficiency programs. The FCA mechanisms do not apply to Avista’s Electric Extra Large General and Street Lighting Service Schedules, nor to its Natural Gas Interruptible and Transportation Service Schedules.

Purchased Gas Cost Adjustment (PGA)
PGA requests are typically filed annually to balance the actual cost of wholesale natural gas purchased by Avista to serve customers with the amount presently included in customer’s rates. Avista does not make a profit on, or markup, the wholesale cost of natural gas. PGAs ensure customers pay what Avista pays, dollar for dollar, only at a more predictable and stable rate throughout the year. These rate adjustments are driven primarily by a reduction in the current surcharge amortization rate and lower wholesale natural gas prices observed during this past winter, which were below the amounts included in rates.

Rate Application Procedure
Avista’s applications are proposals, subject to public review and a Commission decision. Copies of the applications are available for public review at the offices of both the Commission and Avista, and on the Commission’s website (www.puc.idaho.gov). Customers may file with the Commission written comments related to Avista’s filings. Customers may also subscribe to the Commission’s RSS feed (https://puc.idaho.gov/RssPage) to receive periodic updates via e-mail about the case. Copies of rate filings are also available on Avista’s website at www.myavista.com/rates.

If you would like to submit comments on the proposed rate change, you can do so by going to the Commission website or mailing comments to:

Idaho Public Utilities Commission
P.O. Box 83720
Boise, ID 83720-0074

About Avista Corp.
Avista Corp. is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities is the operating division that provides electric service to 418,000 customers and natural gas to 382,000 customers. Its service territory covers 30,000 square miles in eastern Washington, northern Idaho and parts of southern and eastern Oregon, with a population of 1.7 million. Alaska Energy and Resources Company is an Avista subsidiary that provides retail electric service to 18,000 customers in the city and borough of Juneau, Alaska, through its subsidiary Alaska Electric Light and Power Company. Avista stock is traded under the ticker symbol "AVA."  For more information about Avista, please visit www.avistacorp.com.

Avista Corp. and the Avista Corp. logo are trademarks of Avista Corporation.

SOURCE: Avista Corporation

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FAQ

When will Avista's proposed electric rate decrease take effect in Idaho?

If approved, Avista's proposed electric rate decrease would take effect on October 1, 2024.

How much will Avista's natural gas prices decrease for Idaho customers?

Avista has proposed a 25.8% decrease in overall natural gas revenues, which would lower residential customer bills by an average of $18.66 per month or 23.9%.

What is the Power Cost Adjustment (PCA) proposed by Avista (AVA) for Idaho customers?

Avista's proposed Power Cost Adjustment (PCA) for Idaho customers is a decrease of approximately $22.8 million or 7.4% in electric revenues.

How will Avista's (AVA) proposed rate changes affect large general service electric customers in Idaho?

Large General Service electric customers (Schedules 21 & 22) in Idaho would see a 6.3% decrease in their rates if Avista's proposal is approved.