Avista plan severs sales, income

Avista Utilities has proposed a different way of charging customers for natural gas that it says will reward conservation.

The company seeks to “decouple,” or sever the connection, between how much gas a customer uses and how much money the utility receives.

It’s an idea that has been floated by other utilities, and one that has drawn interest from regulators overseeing rates.

The problem is that Avista has fixed costs – such as pipelines and employees – for delivering natural gas; regulators currently tie the amount Avista is allowed to collect for those costs to the amount of natural gas it sells.

This puts the Spokane-based utility in a conundrum: It depends on higher gas usage to pay for the means to deliver it, all while spreading a message of conservation.

Natural gas prices have bounced around during the past year, leaving utilities in a risky business of securing supplies and trying to recover the cost.

In its proposal to the Washington Utilities and Transportation Commission, the company noted the higher cost of natural gas and projections of continued high prices in the future.

Among the best ways to lower exposure to the jumpy markets is for customers to need less and, thus, to require utilities to buy less. Avista sells natural gas to 297,000 customers in Washington, Idaho and Oregon.

Conservation measures – ranging from automated thermostats to new windows and more efficient furnaces – are an important part of this strategy.

Brian Hirschkorn, Avista’s manager of retail pricing, said the proposal would cap any natural gas rate increases tied to decoupling at 2 percent a year.

The decoupling proposal is designed to give Avista a full recovery of its fixed costs of delivering service to its natural gas customers.

The company wants to begin a three-year pilot program in July.