A historic settlement in a contested rate case between Oregon’s second largest gas utility and intervening organizations will require Avista to phase out fossil fuel subsidies, dramatically expand low-income weatherization programs and restrict political spending by the gas company that undermines state climate law.

The settlement will still be subject to approval by the Oregon Public Utility Commission, which is expected in coming weeks.

“This settlement is a huge victory for working Oregonians, who will no longer have to shoulder the costs of expanding Avista’s fossil fuel infrastructure and support the utility’s anti-climate lobbying and litigation,” said Jaimini Parekh, senior attorney for Earthjustice. “The writing is on the wall — Oregon is on the path to electrification and utilities like Avista need to prepare for this transition.”

This settlement is the first in Oregon to phase out costly fossil fuel subsidies that perversely promote the construction of new gas pipelines for use in homes. These subsidies, called line extension allowances, cut the cost for new residential customers to connect to gas utility service — but at a significant burden to ratepayers. An analysis by the Citizens’ Utility Board found that Avista has charged ratepayers as much as $42,032 just to connect one house to gas utility service. These subsidies drive up rates for all customers, while promoting continued reliance on methane gas in homes — a major source of climate and air polluting emissions. Phasing out the use of methane gas in homes and buildings is critical to meeting Oregon’s statewide climate goals.

The settlement also prohibits Avista from charging ratepayers for its anti-climate litigation costs and political activities. As previously reported, Avista sought to recover $57,000 from ratepayers to fund its litigation to overturn the Oregon Climate Protection Program (CPP). The program is one of the state’s bedrock climate policies that requires gas utilities like Avista to decarbonize by 2050. The settlement removes this cost from customer rates, and also deducts an additional $90,000 in costs associated with Avista’s participation in the American Gas Association (AGA) and NW Gas Association. These trade associations have sought to undermine climate action at the state and federal levels with misleading advertising, lobbying, and litigation. Thankfully the cost of these political activities will no longer be borne by Avista ratepayers.

“It is completely unacceptable for a gas utility to charge customers for its efforts to roll back climate policy,” said Greer Ryan, Clean Buildings Policy Manager with Climate Solutions. “This settlement is a major step in the right direction to protect working families by redirecting funds from anti-climate political activities and fossil fuel expansion to weatherization programs that will reduce energy costs and slash pollution.”

Under the settlement, Avista must also to consider non-pipeline alternatives to major investments in capacity expansion, including major supply-side contracts. This means prior to making such investments, Avista must consider whether it can meet increased demand through energy efficiency, electrification, or other non-pipeline alternatives.

Lastly, the settlement increases Avista’s low-income weatherization program budget from approximately $800,000 to $2 million. Improving access to home weatherization services will reduce energy costs for low-income ratepayers, helping them to keep the heat on in the winter while also reducing fuel use.

“While we celebrate this settlement for stopping the growth in fossil fuel infrastructure, it is just the beginning,” said Dylan Plummer, Senior Campaign Representative at Sierra Club. “Rapidly transitioning off of fossil fuels is essential to avoiding climate catastrophe and building resilience for our communities.”

Parties to this settlement included Avista, the Oregon Citizens’ Utility Board, Climate Solutions, Sierra Club, the Alliance for Western Energy Consumers, and staff of the Public Utility Commission.

The Earthjustice attorneys that litigated and settled this rate case include Jaimini Parekh, Noelia Gravotta and Jan Hasselman.