Just in Time for Winter: Natural Gas Prices Going Up
Posted on October 29, 2014 by Bob Jenks
Tags, Consumers and Utility Customers, Utility Regulation
On Tuesday, the Oregon Public Utility Commission (PUC) approved rate increases for Oregon’s three natural gas utilities. Increases range from just under 1% for Cascade Natural Gas to nearly 10% for Avista Utilities. Avista is also seeking an additional rate increase of 9.8% sometime in 2015.
The increases are largely caused by exceedingly cold temperatures that occurred during last winter’s polar vortex. While the vortex did not have much effect in the Pacific Northwest, it had a large and significant impact on natural gas prices throughout the country. This caused gas utilities to have to purchase gas at higher prices than were forecast for last winter. The current PUC rules allow utilities to charge/refund to customers 90% of the difference between their actual costs and their forecasted costs. This is called the “annual true-up”.
For NW Natural, the true-up adds $16.8 million to customers’ bills. Last year’s true-up was a credit of $6.1 million to customers. This year, the loss of the credit and the addition of the surcharge combine for a rate impact of nearly $23 million.
While the primary drivers of the rate increases are the true-ups associated with last winter, gas costs are also going up a bit this winter. Last year’s polar vortex not only raised prices last winter, but led to utilities using nearly all the gas that they had in storage. This caused greater than normal demand once the winter was over as utilities were refilling storage, which has caused prices to continue to be a little higher than normal.
The largest increase is for Avista Utilities, which serves southern Oregon (Medford, Klamath Falls and Roseburg) and part of eastern Oregon (LaGrande). Residential customers of Avista will see an increase of nearly 10%. In addition to this increase, Avista has filed a general rate case application requesting to raise rates an additional 9.8% to cover costs associated with new IT equipment and new pipeline investment. The combination would be a nearly 20% increase for residential customers. CUB believes that the general rate case increase is inflated. In addition, CUB is troubled by the fact that Avista is asking for such a large increase from residential and small business customers, but is asking for no increase from its large commercial and industrial customers. CUB is currently digging into the rate request and will be working to bring it down. Stay tuned to our blog for updates on this case!
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04/24/17 | 0 Comments | Just in Time for Winter: Natural Gas Prices Going Up