Avista profits up 12 percent
Avista Corp. collected a $45.2 million profit in 2005, benefiting from higher customer rates in Washington and Idaho.
The company enjoyed a stronger year, chief executive Gary Ely said, striking what he called “an appropriate balance between providing reasonable rates for our customers and reasonable returns to our shareholders.”
Avista’s profits were 12 percent higher than those of 2004, when the company earned $35.1 million.
Overall, Avista reported revenues of $1.36 billion in 2005 compared with overall sales of $1.15 billion in 2004.
The financial results could have been better: while the regulated utility arm of the company, Avista Utilities, showed earnings of $52.4 million, the energy marketing division struggled and lost money in natural gas trades.
Those $8.6 million losses within Avista Energy were unusual; the division had been a routine moneymaker since 1999. Ely said Avista Energy had already made a turnaround in the fourth quarter, recovering from volatile natural gas prices that the company misjudged.
In a conference call with analysts Friday morning, Ely said he expected 2006 to be a stronger year, mostly because of improvements made in the energy trading segment, but also because the company’s utility arm “continues to move closer to earning its allowed rates of return.”
The company’s optimism regarding its Avista Advantage business also continues to grow. Commercial clients hire Avista Advantage to manage their utility bills.
The concept has worked so well that Avista Advantage has a 95 percent client retention rate and recorded a 35 percent bump in revenues. Profits followed as Avista Advantage added $3.9 million to the parent company’s bottom line, up from $577,000 a year earlier.
Avista has been working to upgrade its credit rating, which slipped during the energy crisis several years ago. Avista’s borrowings have come with a higher interest rate as a result. Though the effort to once again be able to issue investment-grade paper has gone more slowly than desired, the company is making progress, said chief financial officer Malyn Malquist.
The company increased its debt load by $40 million last year to pay for its Coyote Springs 2 power plant in northeastern Oregon, and transmission line improvements.
Wall Street had little immediate reaction to the earnings news. Though trading volume was double the norm, Avista’s share price dipped just 28 cents to close at $18.92.