Thick layers of snow blanketing the Inland Northwest bode well for Avista Corp., which expects a better-than-average year for hydropower generation.
Drainages feeding the Clark Fork River, which contain Avista’s largest dams, contain 110 percent of the average snowpack and moisture level for this time of year. Spokane River is 125 percent of normal.
“This is good news and certainly a vast improvement over last year,” Scott Morris, Avista’s chairman and CEO, said Wednesday during a conference call in which the Spokane-based utility reported lower than expected 2007 earnings. Dry conditions last year were partly responsible.
At high elevations, snowpacks typically accumulate until April 1. The forecast is for continued wet weather through the next several weeks, but “until we actually turn all that snow into electricity, we are going to be a bit cautious regarding the benefits of the situation,” Morris added.
Dams account for more than half of Avista’s energy output.
For 2007, Avista reported net income of $38.05 million, down from income of $72.9 million in 2006. For the fourth quarter only, Avista’s income was $14.1 million, down from $17.8 million for the fourth quarter of 2006.
Morris attributed the lower earnings to several factors, including a decision in late 2006 by the Washington Utilities and Transportation Commission to turn down an Avista rate-increase request. Weather also played a role. Mild temperatures led to lower-than-expected energy use, which reduced sales. The warmer, drier conditions also reduced hydropower generation at Avista’s dams, driving up the cost of electricity.
Morris predicted improved financial conditions in 2008. He cited a subsequent rate increase for Washington customers that took effect Jan. 1; the company’s plans to refinance high-cost debt; and the better outlook for hydro operations.
However, “how valuable that snowpack is in terms of electricity generated depends on when the snow melts,” Morris added. “We’re hopeful that the runoff in the Clark Fork will extend into June and July.”