Cascade and Avista Want to Increase Rates Back to Back
Posted on May 5, 2020 by Will Gehrke
Tags, Energy
Both of the two medium-sized natural gas utilities in Oregon, Avista and Cascade, want to increase natural gas rates. Avista is seeking to increase rates by $6.8 million; Cascade is seeking an increase of $4.5 million. These rate increases are occurring during a difficult period for Oregonians. In March 2020, Oregon’s statewide unemployment rate was 3.3 percent. Today it is estimated to be 20 percent. Due to public health concerns, many Oregonians are out of work, with no certainty of relief on the horizon.
Since natural gas rates are based on the cost of operations, one might ask why Avista and Cascade are seeking rate increases. For example, it would not be unreasonable to expect decreased costs for employees or materials during an economic slowdown. However, there are significant fixed costs associated with maintaining a natural gas distribution system. Cascade and Avista must maintain the natural gas pipeline system to keep gas flowing to their customers. The primary reason for these expected rate increases is the cost of replacing old natural gas pipeline investments.
Avista and Cascade are headquartered in Washington. Several decades ago, the two utilities purchased their Oregon service territory to expand their business and benefit from the cost efficiencies of a larger business enterprise. Cascade’s Oregon service territory is located in Northeastern Oregon and Deschutes County. Avista’s Oregon service territory is located in Southern and Eastern Oregon. Avista and Cascade’s purchased Oregon natural gas distribution systems contain sections of pipe that date from the 1950s and 1960s, which are still in use today. To safely maintain and provide natural gas to customers, both utilities are reinstalling and reinforcing their pipeline systems.
Over the past five years, Avista and Cascade have sought to increase rates on a regular basis to cover the cost of pipeline replacement programs. CUB will be reviewing each company’s request and determining if the investments made by the company are reasonable. Residential customers are the largest customer group in both Avista’s and Cascade’s service territories. Based on the respective utilities’ analyses, Avista and Cascade have proposed to place a majority of the rate cases’ cost burden on residential customers. CUB recognizes the financial hardship many households throughout Oregon are undergoing. We believe any rate change should be incremental and not place an additional burden on Oregonians’ household budgets. CUB will provide an update on both rate cases in the midsummer as the cases develop.
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05/05/20 | 0 Comments | Cascade and Avista Want to Increase Rates Back to Back