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Utility will raise natural gas price

Plan on paying higher natural gas bills this winter.

For the first time since 1997, Avista Utilities says it will file for a Dec. — rate increase to reflect higher producer prices nationwide for natural gas.

We're out doing the best we can on gas prices, but that's where the market is, says Avista regional manager Scott Morris.

Nationwide, residential natural gas prices are expected to be about 17 percent higher than last winter, the U.S. Energy Department estimated this week. Natural gas prices at the producer level likely will be about 43 percent higher at the wellhead this winter, although they may ease a bit in the second half of the winter as supplies increase.

Avista expects to ask the Oregon Public Utility Commission for a 10 to 15 percent rate increase, Morris says. Company officials are still calculating how much higher rates will need to be to cover the increased costs and expect to file the formal request next month.

The higher rates would not change Avista's profit margins, Morris says. The rates the company charges consumers are made up of three components: the price Avista pays suppliers for gas, the cost of moving gas from the suppliers to the area and what Avista charges to provide and maintain the service. Only the first factor, the supplier price, is changing.

The Spokane, Wash.-based company, which has 45,000 customers in the Rogue Valley, is currently charging 51.3 cents per therm to residential customers. A 15-percent increase would raise that to 59 cents a therm, though company officials doubt the increase will be that high. State regulators say Avista's average residential customer uses about 60 therms a month, so an average customer's bill would go up $4.62 or less.

Northwest Natural Gas of Portland charges 63.5 cents a therm.

Avista buys its natural gas from three separate markets _ an arrangement that allows it to play one off the other and get the lowest price, Morris says.

The company changes its rates only once a year. As the prices Avista pays rise and fall, any difference between the company's cost and the amount customers pay accumulates in a special account. Any difference is either refunded to customers the next year through a rate cut or charged to them by way of an increase.

Last year, the company cut rates 2 percent. In 1997, it raised them 8.9 percent. The 1997 increase followed a reduction of about 15 percent over the two previous years.

The trend toward higher natural gas prices has been attributed to a combination of factors including higher demand and lower-than-expected production, especially in the Gulf of Mexico. Supplies of natural gas are expected to pick up later this year, prompting an easing of producer prices in the first quarter of 2000, government officials said.

Residential heating oil prices on average could be 30 percent higher than last winter, the Energy Information Administration said in its latest short-term energy outlook report released Tuesday.

EIA officials said the higher prices stem mostly from the fact that crude oil prices have increased $7 to $8 a barrel since last winter _ up to about $19 in August _ and are expected to rise above $20 a barrel throughout the coming winter.