Avista, Oregon's second largest natural gas utility, can no longer make customers pay for its political activities and subsidize new residential gas pipelines, according to the terms of a settlement agreement approved by the Oregon Public Utility Commission.
The Oregonian reports last week's settlement includes a smaller rate increase of 4.7% – instead of the 8% sought by the company earlier this year. It also increases Avista's low-income weatherization program budget from about $800,000 to $2 million. Avista serves more than 106,000 customers in parts of southern and eastern Oregon.
The settlement marks the first time in Oregon history that a gas utility will phase out charges called line extension allowances, in which all customers bear the cost of connecting new buildings to the gas pipeline system. Without the subsidies, an individual developer or homeowner would have to cover the costs of new pipelines.
Climate activists who oppose the expansion of the natural gas system say line extension allowances encourage new homes to be built with gas at a time when gas utilities should instead drastically reduce their emissions.
A natural gas fact-finding investigation released by the Public Utility Commission earlier this year found that growing the gas system in Oregon and adding new hookups will increase emissions and drive up utilities' costs to comply with the state’s climate mandate to reduce fossil fuel emissions – which is likely to lead to rate increases for all customers.
Last October, state regulators ordered NW Natural, Oregon's largest natural gas utility, to reduce – but not completely phase out – its line extension allowances. Avista's line extension subsidies are more than double those of NW Natural.
