Costs for replacing aging electric infrastructure to ensure
reliability is the major driver in Avista's (NYSE: AVA) request
filed today with the Washington Utilities and Transportation
Commission (UTC) to increase electric and natural gas rates for
customers. The UTC has up to 11 months to review the filings and
issue a decision.
"We continue to make significant investments in replacing our
aging infrastructure and upgrading our generation facilities to
preserve reliability and gain efficiency," said Avista Chairman,
President and Chief Executive Officer Scott L. Morris. "Although we
have taken measures to ensure that the costs we incur represent the
most cost-effective and reliable way to continue to serve our
customers, we continue to experience significant increases in
costs."
The requests would produce $38.3 million, or 8.7 percent, in
additional billed revenue for electric service and $6.2 million, or
4.0 percent, in additional billed revenue for natural gas service.
Both requests are based on a proposed rate of return on rate base
of 8.23 percent, with a common equity ratio of 48.04 percent and a
10.9 percent return on equity.
If the requests are approved by the UTC, a residential customer
using an average 977 kilowatt hours per month would see a $7.13 per
month increase, or 9.3 percent, for a revised monthly bill of
$84.14. A natural gas customer using an average of 67 therms per
month would see a $3.26 increase, or 5.1 percent, for a revised
monthly bill of $66.71.
Electric In 2011, Avista is investing
approximately $250 million in its infrastructure to ensure
reliability and meet customer demand by systematically replacing
aging equipment, including power lines, poles, substations,
transformers and related equipment for its transmission and
distribution systems, in addition to upgrading generation-related
facilities. National compliance requirements also drive Avista's
need for continued investment in its transmission system.
The cost of upgrading equipment today is orders of magnitude
more expensive than the equipment being replaced, some of which has
been serving customers for 40 to 70 years. The significant
difference between the aging infrastructure and the replacement
equipment is a major driver in the need for annual rate
adjustments. Based on current expectations, Avista plans to invest
approximately $1.2 billion in its utility system for the five-year
period ending Dec. 31, 2015.
Also included in infrastructure costs are upgrades to the
remaining two 1950s-era turbines at Avista's Noxon Rapids
hydroelectric project in Montana that will increase the amount of
clean, renewable power available to serve customers. In Washington,
the increased capacity resulting from upgrades will count as new
renewable energy under the state's renewable portfolio standards
law. Among other generation-related projects included in the filing
are the $4.7 million upgrade of the 82-year-old spill gates at
Avista's Nine Mile project that will increase efficiency, as well
as maintenance and upgrades at other hydro and thermal
facilities.
To enhance service reliability, Avista is also requesting to
recover increases in costs related to its vegetation management
program that covers almost 11,000 circuit miles of power lines.
Other additional cost increases relate to power supply and
transmission-related expenses, as well as administrative and
general expenses.
Natural Gas The major driver in the
requested natural gas increase is to recover the cost of a portion
of the gas stored in the Jackson Prairie Storage facility. The
addition of the underground storage capacity in 2011 will allow
Avista to purchase and store natural gas during the months when
market prices are generally lower and use the natural gas to serve
customers during winter months when market prices tend to be
higher. Other drivers are upgrading sections of existing piping and
equipment used to deliver natural gas to customers.
Avista serves more than 234,000 electric and nearly 147,000
natural gas customers in Washington.
Videos on the rate case process and components of Avista's rate
request, along with additional rate request information are
available at www.avistautilities.com.
Customer Assistance "We are committed to
offering energy efficiency programs for all customers and to
supporting energy assistance services that help those residential
customers who are most impacted by rising prices," Morris said.
A variety of efficiency programs and information is available
for residential, limited income, commercial and industrial
customers seeking ways to manage their energy use. In addition, the
programs also help reduce the amount of future, more costly energy
resources needed to meet customer demand. To learn more, visit
www.everylittlebit.com.
In addition to support for energy assistance programs, Avista
also offers services for customers such as comfort level billing,
payment arrangements and Customer Assistance Referral and
Evaluation Services (CARES), which provide assistance to
special-needs customers through referrals to area agencies and
churches for help with housing, utilities, medical assistance and
other needs. To learn more, visit www.avistautilities.com.
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 358,000 customers and
natural gas to 319,000 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 1.5 million.
Avista's primary, non-regulated subsidiary is Advantage IQ. 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 Annual Report on Form 10-K for the year
ended Dec. 31, 2010, and the Quarterly Report on Form 10-Q for the
quarter ended March 31, 2011.
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Contact: Debbie Simock - (509) 495-8031 Email Contact
Investors: Jason Lang (509) 495-2930 Email Contact Avista 24/7
Media Line (509) 495-4174 Online information available at
www.avistautilities.com
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