Avista Makes Annual Price Adjustment Requests in Washington

Rhea-AI Summary

Avista (NYSE: AVA) has filed annual rate adjustment requests with the Washington Utilities and Transportation Commission. If approved, these adjustments would result in an overall 13.9% decrease in natural gas rates and a 3.5% increase in electric rates for Washington customers, effective November 2024.

Key points:

• Natural gas adjustments include a significant 24.6% decrease in Purchased Gas Cost and an 8.3% increase for Climate Commitment Act compliance.
• Electric adjustments include increases for Low Income Rate Assistance Program (2.3%) and Insurance Expense Balancing (0.7%).
• Residential natural gas customers using 66 therms/month would see bills decrease by $13.66 to $87.20.
• Residential electric customers using 945 kWh/month would see bills increase by $3.82 to $109.58.

Positive

• Overall decrease of 13.9% in natural gas rates, potentially lowering costs for customers
• Significant 24.6% decrease in Purchased Gas Cost Adjustment for natural gas
• Implementation of My Energy Discount program to help eligible customers lower energy bills
• Availability of various customer assistance programs and resources for managing energy usage

Negative

• Overall increase of 3.5% in electric rates, potentially raising costs for customers
• 8.3% increase in natural gas rates due to Climate Commitment Act compliance costs
• Increase in Low Income Rate Assistance Program costs for both electric and natural gas customers

Financial Analyst

Avista's annual rate adjustment filings present a mixed impact on the company's financials. The 13.9% decrease in natural gas rates could potentially reduce revenue, but this is largely offset by cost reductions in wholesale gas purchases. The 3.5% increase in electric rates should boost revenue, albeit modestly.

Key points to consider:

• The $74.5 million decrease in Purchased Gas Cost Adjustment is revenue-neutral for Avista, as it's a pass-through cost.
• The Climate Commitment Act increase of $25.2 million for natural gas and the $15.3 million increase for the Low Income Rate Assistance Program in electric rates are significant and may impact profitability.
• The overall impact on Avista's bottom line appears to be slightly positive, with potential for improved margins in the electric segment.

Investors should monitor how these rate adjustments affect Avista's customer base and long-term demand, particularly in the natural gas segment where the price decrease is substantial.

Energy Policy Expert

Avista's rate adjustments reflect broader trends in energy policy and market dynamics:

• The significant natural gas rate decrease (13.9%) aligns with recent trends of lower wholesale gas prices, benefiting consumers but potentially challenging gas utilities' growth prospects.
• The Climate Commitment Act's impact (8.3% increase for gas) showcases the growing influence of climate policies on utility operations and costs.
• The expansion of low-income assistance programs in both gas and electric segments indicates a growing focus on energy equity and affordability.
• The modest increase in electric rates (3.5%) suggests a balancing act between covering costs (e.g., wildfire expenses) and maintaining competitive pricing.

These adjustments reflect Avista's adaptation to evolving regulatory landscapes and environmental concerns, particularly in Washington state. The company's proactive approach to clean energy implementation and customer assistance programs may position it favorably in a shifting utility market.

Consumer Advocate

From a consumer perspective, Avista's rate adjustments present a mixed bag:

• Natural gas customers will see significant relief with a 13.5% decrease in average monthly bills, which is particularly beneficial given current economic pressures.
• However, electric customers face a 3.6% increase in average monthly bills, which, while modest, may still impact household budgets.
• The expansion of the Low Income Rate Assistance Program is a positive step, potentially helping more vulnerable customers manage their energy costs.
• The introduction of the My Energy Discount program and various billing options demonstrate Avista's efforts to provide flexibility and support to customers.

While the overall impact appears customer-friendly, especially for gas users, it's important to monitor how the electric rate increase affects different customer segments. The company's emphasis on energy efficiency programs and assistance options could help mitigate the impact of rate changes on consumers.

Overall changes would be effective November 1, 2024 for electric customers and November 15, 2024 for natural gas customers

SPOKANE, Wash., Aug. 30, 2024 (GLOBE NEWSWIRE) -- Avista (NYSE: AVA) has made annual rate adjustment filings with the Washington Utilities and Transportation Commission (Commission) that if approved, will result in an overall decrease in natural gas rates of 13.9%, and an overall increase in electric rates of 3.5%.

Washington Natural Gas Adjustment Filings
Four natural gas adjustments were filed, that if approved, are designed to change overall natural gas revenues as follows:

1. Purchased Gas Cost Adjustment: decrease of $74.5 million or 24.6%
2. Climate Commitment Act: increase of $25.2 million or 8.3%
3. Low Income Rate Assistance Program: increase of $6.8 million or 2.3%
4. Insurance Expense Balancing: increase of $0.2 million or 0.1%

Washington Electric Adjustment Filings
Five electric adjustments were filed, that if approved, are designed to change overall electric revenues as follows:

1. Wildfire Expense Balancing: increase of $1.4 million or 0.2%
2. Residential Exchange Program: decrease of $0.7 million or 0.1%
3. Insurance Expense Balancing: increase of $4.6 million or 0.7%
4. Clean Energy Implementation Plan: increase of $2.1 million or 0.3%
5. Low Income Rate Assistance Program: increase of $15.3 million or 2.3%
   

Purchased Gas Cost Adjustment (PGA) – Applicable to Washington Natural Gas
PGA requests are 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. About 55% of an Avista natural gas customer's bill is the combined cost of purchasing natural gas on the wholesale market and transporting it to Avista's system.

The proposed PGA reduction is largely driven due in part to a reduction in the wholesale cost of natural gas, as well as the reduction in a surcharge put into place last year to recover costs included in our August 2023 PGA annual rate filing.

Climate Commitment Act – Applicable to Washington Natural Gas
The CCA, passed by the Washington State legislature and enacted into law in 2021, implements a cap-and-invest program designed to meet emission reduction targets and reduce emissions by 95% of 1990 levels by 2050. Natural gas utilities must meet declining targets for greenhouse gas emissions (GHG) as compared to a baseline, which is the average emissions from 2015-2019. Beginning in 2023, natural gas utilities received no-cost emissions allowances to cover a portion of their GHG baseline, which 65% of the no-cost allowances had to be consigned to allowance auctions held by the Department of Ecology. Consignment of no-cost allowances to auction resulted in revenues back to the utility, which shall be used for the benefit of customers as determined by the Commission, including at minimum, eliminating any additional cost burden to low-income customers due to the implementation of the CCA. Locations connected to the natural gas system after July 25, 2021, are not eligible to receive any benefit from these revenues, per state law. The rate change proposed reflect the higher costs of compliance with the CCA.

Low Income Rate Assistance Program – Applicable to Washington Electric and Natural Gas
The Low Income Rate Assistance Program, or LIRAP, provides bill assistance to income eligible customers with a household income less than or equal to 200% Federal Poverty Level (FPL) or 80% Area Median Income (AMI), whichever is greater. This rate increase is necessary to support the continuation and expansion of all LIRAP components, which includes both an income-based bill discount as well as offerings intended to help customers manage their past due balances.

Insurance Balancing Account – Applicable to Washington Electric and Natural Gas
The Insurance Expense Balancing account tracks the difference in insurance expense incurred by Avista to the base level of expense approved by the Commission in customer rates. The difference is rebated to, or collected from, customers annually. The rate changes proposed reflect the higher level of expense incurred for electric customers and lower expense incurred for natural gas customers, compared to the approved amount.

Wildfire Balancing Account – Applicable to Washington Electric
The Wildfire Expense Balancing account tracks the difference in wildfire expenses incurred by Avista to address the growing frequency of extreme and dangerous wildfires in Avista’s service territory to the base level of expense approved by the Commission. The difference is rebated to, or collected from, customers annually. The rate increase proposed today reflects the higher level of expense incurred above the approved amount.

Residential Exchange Program – Applicable to Washington Electric
The Residential Exchange Program provides a share of the benefits of the federal Columbia River power system to the residential and small farm customers of the investor-owned utilities in the Pacific Northwest, including Avista. Avista applies the benefits it receives, which typically fluctuate from year to year, to customers as a reduction in their monthly electric rates. Due to fluctuations in usage, Avista rebated to customers a level of benefits that was lower than the level of benefits received from BPA. Through this filing Avista is seeking to slightly increase the level of benefits provided to qualifying customers in order to return the under-rebated balance.

Clean Energy Implementation Plan – Applicable to Washington Electric
Avista’s Clean Energy Implementation Plan (CEIP) tariff recovers the costs associated with our clean energy transition. These costs include a “Named Communities Investment Fund” (NCIF), which helps assist with the equitable distribution of CEIP energy and non-energy benefits and reduction in burdens to Vulnerable Populations and Highly Impacted Communities (Named Communities). In addition to the NCIF, this tariff recovers the costs for additional resources necessary for implementation of Avista’s CEIP and associated conditions to the CEIP.

Effect on Customer Bills

Natural Gas Customer Bills
Washington: If approved by the Commission, residential natural gas customers in Washington using an average of 66 therms per month would see their monthly bills change from $100.86 to $87.20, a decrease of $13.66 per month, or approximately 13.5%, when compared to rates currently in effect.

The percentage change varies by rate schedule and is dependent upon how much energy customers on the respective rate schedules use. If approved, natural gas customers would see the following rate adjustments:

	General Service - Schedule 101	(14.2)%
	Large General Service - Schedules 111 & 112	(18.6)%
	Interruptible Sales Service - Schedules 131 & 132	7.9%
	Transportation Service - Schedule 146	61.8%
	Overall	(13.9)%

Customers served on Transportation Service Schedule 146 procure their own wholesale natural gas and interstate pipeline transportation service. As such, those customers do not receive the effects of the reduction due to the PGA.

Electric Customer Bills
Washington: If approved by the Commission, residential electric customers in Washington using an average of 945 kilowatt hours/month would see their monthly bills change from $105.76 to $109.58, an increase of $3.82/month, or approximately 3.6%.

The percentage change varies by rate schedule and is dependent upon how much energy customers on the respective rate schedules use. If approved, residential electric customers would see the following rate adjustments:

	Residential Service - Schedules 1, 7 & 8	3.6%
	General Service - Schedules 11, 12, 13, 17 & 18	3.4%
	Large General Service - Schedules 21, 22 & 23	3.7%
	Extra Large General Service - Schedules 25 & 25I	2.5%
	Pumping Service - Schedules 31 & 32	4.1%
	Street & Area Lights - Schedules 41-48	4.6%
	Overall	3.5%

Customer Resources

When customers need help with their energy use and billing, Avista has ways to assist. In Washington, Avista recently launched My Energy Discount, a personalized monthly bill discount program to help eligible customers lower their energy bills. The program offers more inclusive eligibility guidelines, quick and easy enrollment, and a two-year discount term. In addition, billing options, such as Comfort Level Billing, preferred due date, and payment arrangements, give customers more control over how their energy costs are spread out.

For help with managing energy usage, Avista’s Energy Manager and home energy audit tools, as well as energy-saving tips, videos and money-saving rebates for energy-efficient upgrades, are available. In addition, Avista provides local community action agencies with funding for eligible customers who need emergency grants, home weatherization and heating system improvements. Customers with special health or financial circumstances can also work directly with our Customer Assistance Referral and Evaluation Services (CARES) team to be connected with resources for help with housing, other utilities, medical assistance, and more. For more information on assistance options, customers can visit www.myavista.com/assistance.

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 our operating division that provides electric service to 418,000 customers and natural gas to 382,000 customers. Our 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. AERC is an Avista subsidiary that, through its subsidiary AEL&P, provides retail electric service to 18,000 customers in the city and borough of Juneau, Alaska. Our stock is traded under the ticker symbol “AVA”. For more information about Avista, please visit www.avistacorp.com.

This news release contains forward-looking statements regarding the company’s current expectations. Forward-looking statements are all statements other than historical facts. Such statements speak only as of the date of the news release and are subject to a variety of risks and uncertainties, many of which are beyond the company’s control, which could cause actual results to differ materially from the expectations. These risks and uncertainties include, in addition to those discussed herein, all of the factors discussed in the company’s and the Quarterly Report on Form 10-Q for the quarter ended Jun. 30, 2024, and its Annual Report on Form 10-K for the year ended Dec. 31, 2023.

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

SOURCE: Avista Corporation

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FAQ

When will Avista's new rates take effect in Washington?

If approved, the new rates for Avista (AVA) would take effect on November 1, 2024, for electric customers and November 15, 2024, for natural gas customers in Washington.

How much will Avista's natural gas rates change in Washington?

Avista (AVA) has requested an overall decrease of 13.9% in natural gas rates for Washington customers, primarily due to a 24.6% decrease in the Purchased Gas Cost Adjustment.

What is the proposed change in Avista's electric rates for Washington customers?

Avista (AVA) has proposed an overall increase of 3.5% in electric rates for Washington customers, with various adjustments including increases for the Low Income Rate Assistance Program and Insurance Expense Balancing.

How will Avista's rate changes affect the average residential customer's bill in Washington?

If approved, the average residential natural gas customer in Washington using 66 therms/month would see a decrease of $13.66 in their monthly bill, while the average residential electric customer using 945 kWh/month would see an increase of $3.82 in their monthly bill.