Medford, Ore.-Area Natural Gas Utility Wants 29 Percent Rate Increase Source: Knight Ridder/Tribune Business News Publication date: 2000-12-12 Arrival time: 2000-12-14

Dec. 12--Increased demand for natural gas has led Avista Corp. to ask for a 29 percent increase in Northwest residential rates and to warn some industrial customers of a possible temporary shutdown. The natural gas utility has requested the rate increases for Washington and Idaho and soon will file a similar request in Oregon, according to Avista managers. It is not clear when the proposed increases would take effect.

The rate increase request reflects a significant hike in wholesale natural gas prices the Oregon Public Utilities Commission has authorized utility companies to pass through to customers.

Avista managers say proposed increases will not surpass wholesale market hikes.

"I understand consumers feel helpless," said Avista customer service manager Richard Robart. "It's strictly a cost pass-through. It doesn't make a cent for us." Avista last increased residential rates in October.

Recent industrial rate increases are being blamed for about 30 layoffs at Medply this month.

Avista managers asked American Linen Supply and other Rogue Valley businesses last week to fine tune secondary energy sources in case of a shutdown.

Although the requested cutbacks reflect a "voluntary curtailment" on the part of customers, American Linen will spend the weekend testing a secondary source of fuel to run the company's boilers, said general manager Bob Sylva.

"We are preparing for an event that may or may not happen," Robart said of Avista's warnings. "We don't want to call (customers) tomorrow and not have them be ready.

"We used the weather warning to make sure industrial customers were ready in case of a curtailment," he said.

"It allows customers to check their systems and make sure they have fuel in the tanks. Even if we didn't have a curtailment, they would be ready for something like a line rupture."

Rather than a lack of a source for natural gas, officials say the region's transportation pipeline can't keep up with increased demand.

"We're pulling all of the gas through the pipeline that could possibly come through," said Chuck Gates, Avista marketing development director.

An anticipated cold snap this weekend with a related surge in home heating demand prompted Avista's request for industrial customers with "interruptible" contracts to voluntarily cut consumption by half.

The strain on the natural gas delivery system has been compounded by California's energy crisis, a utility market crippled by deregulation, two nuclear power plants down for repair and a lack of new electrical generation facilities.

"We're competing with California for the same natural gas supply," Gates said.

The last time industrial natural gas customers were asked to cut back on consumption was about four years ago. Soon after, pipeline capacity was increased with the purchase of the line Pacific Gas Transmission built east of Klamath Falls. The line was extended into Medford.

"That was a major accomplishment for us," Robart said. "That gave us access (to natural gas) we didn't have before."

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=16570356&ID=cnniw&scategory=Utilities%3AGas

-- Martin Thompson (mthom1927@aol.com), December 15, 2000