COEUR d’ALENE — A $3.50 convenience fee paid by Avista Utilities residential ratepayers to process online and telephonic payments that has drawn complaints from customers will be going away this fall.

Avista has received approval from the Idaho Public Utilities Commission to process the payments on its own — something utility officials say can be done for as little as $1.50 per transaction.

Avista estimates it will cost about $195,000 per year to process the payments for its Idaho electric customers and $120,000 per year for natural gas customers. The utility will defer and record the costs it incurs to process the payments for 36 months. It will then determine whether to seek a rate hike from IPUC to pay for those costs.

"We estimate the cost will be 5 to 8 cents per month and will be spread across the board (to all residential customers)."

Avista will also file a report with the IPUC every six months detailing the program's expense and customer participation levels.

The convenience fee is charged by an undisclosed third-party vendor and none of the funds are received by Avista.

"We are not contractually allowed to publicize the name of the vendor," spokeswoman Debbie Simock said.

Simock said the convenience fee is one of the largest frustrations expressed by the utility’s growing number of customers who pay electronically or by telephone. Only about 38 percent of customers mailed in payments in 2015, with the rest paying online or over the telephone.

"The percentage of customers who use online or telephonic basis is growing every year — now at about 62 percent of all customers and increasing," said Gene Fadness, IPUC spokesman. "So, there’s a far greater number of customers who, under the current system, are paying $2 more per month than they really need to."

Avista serves about 125,000 electric and 80,000 natural gas customers in North Idaho.

"A lot of other companies don't charge such a fee, so this makes it easier for our customers to pay by the method of their choice without an additional fee," she said. "We had just not taken this step."

Simock said while the possible minimal future rate hike to pay for the in-house processing would affect all customers, including those who mail in payments, the change would open up the online option to current mail-in customers for just a nominal fee.

Fadness said it's impossible to bill every customer precisely what it costs to serve that customer because of all the variables involved.

"There’s built in inequity no matter what you do," Fadness said. "The 105,000 customers who use paperless billing are paying a share of the costs to print and mail bills to other customers. So, the ideal is to find and encourage those payment methods that are least cost to the company and thus the least cost for all customers."

For every bill paid electronically, it saves the company (and ratepayers) 58 cents or $6.96 per account per year.

Further, each of the calls that come in to complain about the convenience fee costs the company about $6 in employee time, Fadness said.

"Those are calls and expense that go away when the convenience fee does," he said.

Simock said it's unclear exactly when Avista would seek a rate hike to pay for processing the payments, but it would be at least three years and after data is collected.

Avista has also received approval in its Washington and Oregon jurisdictions to eliminate the convenience fee.

A copy of the IPUC’s final order as well as other documents related to the case are available at www.puc.idaho.gov. Click on "Open Cases" under the "Electric" heading and scroll down to Case No. AVU-E-16-01.