May 9, 2006 in Business

Avista considers basic change

By The Spokesman-Review
 

When Avista Corp.’s shareholders meet Thursday, they will be asked to change the Spokane company’s corporate structure to a holding company.

The change, and resulting stock-swap, would be transparent to ratepayers and shareholders, but may allow the company more flexibility within its business units. It would help Avista further distance its independent marketing and consultation businesses from its regulated utility.

Dividends from the different business units would be upstreamed to the holding company for distribution.

The company continues to turn around its business fortunes after the energy crisis several years ago, according to financial filings.

Buoyed by strong profits during the first three months of the year and a stock price riding a five-year high, the company is poised to tell shareholders that all business segments are performing at or above expected levels.

That was the message Gary Ely, chairman and chief executive officer, gave during a conference call last week that earned congratulations from analysts.

Avista’s utility division serving ratepayers in Spokane and North Idaho is collecting a rate of return of about 8 percent, close to its allowed level set by state regulators. And the company’s unregulated energy marketing unit reversed an unusual loss and again delivered earnings.

Furthermore, the company is optimistic about its Avista Advantage segment — a business that helps manage the utility bills of commercial clients.

The company continues to work on upgrading its credit rating. Returning to investment grade would allow the company to refinance its borrowings with a more favorable rate.

Despite the good outlook for investors, the company may not escape criticism.

Annual meetings give dissenting shareholders the unusual opportunity of posing questions to a company’s board of directors and executives.

Advocates for the poor have criticized the company for raising electricity and natural gas rates that ate into household budgets — and for boosting executive salaries.

Also, the company is in the midst of a tough relicensing effort for its series of dams on the Spokane River, which generate electricity and maintain the water level of Lake Coeur d’Alene.


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