Spokane7
48°
February 18, 2010 in Business, City
Avista reports earnings, will seek rate hike in 2011
Avista Corp. will ask Washington and Idaho regulators for permission to raise utility rates by early next year.
The Spokane-based company plans to file “rate cases” with both state’s public utilities commissions by the end of March, for increases that would take effect in late 2010 or early 2011, Avista’s Chief Financial Officer Mark Thies told analysts during a Thursday conference.
Rate cases lay out Avista’s rationale for higher rates and typically take 11 months to be decided in Washington, and seven months in Idaho. Company officials haven’t finalized how much of a rate hike they will request.
Meanwhile, Avista reported an 18 percent gain in net income last year. The company earned $87.1 million last year, compared to 2008’s earnings of $73.6 million. For the fourth quarter of 2009, Avista reported $22.1 million in earnings, compared to $17.5 million for the fourth quarter of 2008.
As a result of the stronger performance, Avista’s board of directors raised stock dividends from 21 to 25 cents per share.
Scott Morris, Avista’s chairman and CEO, credited several factors for the company’s improved financial results. Since mid-2009, Avista has been successful in getting utility rates raised for customers in Washington, Idaho and Oregon. Morris said the higher rates helped the company offset the $200 million that Avista spends each year to upgrade its transmission and distribution system.
Lower wholesale costs for electricity and natural gas also helped the company’s bottom line, Morris said. Customers shared in the benefits of lower wholesale rates through a break on their gas bills, he added. Customers saved 22 to 26 percent from the lower wholesale rates, though the part of their bill that reflects Avista’s costs for delivering natural gas went up slightly.
Avista also refinanced its long-term debt last year, which lowered the company’s interest payments. Morris said that savings is reflected in 2009 results.
In other news, Morris and Thies said:
•Even with the tough economy, Avista’s customer base continues to grow. The company added more than 2,000 natural gas customers last year and 1,800 electric customers.
•The El Niño trend that led to mild temperatures in January and February and reduced snowpack could reduce electrical output at the company’s dams this summer.
Miners to return to Lucky Friday 
Scoutster on February 18 at 10:44 a.m.
$.25 a share. This is money that should go to consumers, not shareholders.
Avista should be co-opted and we the people should own it. Call it socialism if you want (or call it whatever you want to).
If you believe private business is better suited to operating services, you might be right but only in a competitive environment.
No essential service that operates as a monopoly should be private.
Avista should disappear.
Shylock13 on February 18 at 2:29 p.m.
Avista, our “friendly” neighborhood predator, continues to fatten itself rather than provide consumers with a reasonable rate reduction. To increase the shareholders’ earnings, rather than reduce rates, is outrageous. Avista had to lower its natural gas rates; no regulatory agency would have allowed them to continue to gouge the public given the declines in wholesale prices for natural gas. Obviously, with significant increased profit, Avista could have lowered the rates even more. Instead, stockholders get the cash–and how many Avista executives own stocks in Avista?
Dan_at_Avista on February 18 at 3:43 p.m.
William,
You mentioned regulatory agencies in regards to how we lowered natural gas rates in 2009 (around 30%). You’re right, regulatory agencies not only monitor what we do, they set our rates.
As a regulated utility everything we do is public and transparent – but not always very clear. Let me explain: To provide safe and reliable energy for customers, we get cash from customers, bondholders/banks and shareholders. Customers get a safe and reliable system, which we reinvest in though upgrades and equipment. We also use that cash to pay interest and principal on debt – but also provide a fair return for our shareholders. Profits are the fair return to investors allowed by our state regulators.
Operating a financially healthy business allows us to keep costs as low as reasonability possible while serving more than 450,000 customers and investing more than $200 million every year to build and upgrade our $2 billion energy system of pipes, poles, generating facilities and other equipment.
If you want more info on Avista check out our blog at www.avistautilities.com/blog
Shylock13 on February 18 at 4:12 p.m.
Dan,
We obviously disagree on the meaning of “fair”! Did not Avista recently get permission to INCREASE the percentage given to stockholders to 10%? And that is at a time when CDs are paying way less than 2%, savings accounts far less than 1%, and checking accounts zero. Can you justify that? And you did not respond to my question about how many Avista executives hold stock. A new question—what percentage of stock is owned by Avista executives and employees?
However, I do appreciate the efficiency of Avista in delivering its services.
Bill
Albert on February 18 at 4:42 p.m.
Hello Dan, may I respectfully remind you that Avista is a monopoly. It has absolutely no competition. Despite a massive recession wherein corporations have ceased to exist, Avista enjoyed a massive profit over 2008. I note today that even good ole WalMart was in the hole - again. Your comments are typical of the Corporate Spin that permeates exclusive public monopolies that profit at the public expense. People have lost their jobs, the employment figures are staggering, considering those unfortunate folks who no longer qualify for benefits, the foreclosure rates are continuing to climb, and Avista has experienced yet another substantial profit over 2008. Your views are offensive, reek of corporate-speak, and hold no basis of integrity.
zelda on February 18 at 5:00 p.m.
Whenever Dan at Avista comments, I feel like I’m getting an email from the HAL 9000. “I understand your concerns, Dave, but let me explain…”. Creepy corporate tool.
twobit on February 18 at 5:05 p.m.
i use avista and inland power a coop they seem to do a good job at getting us eletric cost are close to same tho and much smaller company inland is
eagleproducer on February 18 at 5:15 p.m.
Millions made from the power generated by melted snowflakes that fell mainly on public land, harnessed from public waterways and delivered over public land right of ways.
Seattle has much lower rates for electricity than Spokane. I believe it is because the city has a publicly owned utility service.
Inland Power is still a monopoly in the regions they service.
Anne_Observer on February 18 at 5:34 p.m.
I have to agree with what seems to be the common sentiment here. While everybody else has suffered at least a downturn in their business, Avista made 18% MORE last year. And gave a good chunk of that to shareholders.
Investment or not, it is not in the public interest to see profits from reduced costs go to outside investors rather than back to the customers who are not only providing all the revenue, but themselves suffered economic woes during the same year.
I also note that the article mentions that electricity costs went down, too, but only gas rates were reduced. Without knowing how much, I don’t know whether that really means much, but from a customer’s perspective it still looks bad.
And I think it is telling that an Avista employee tried to explain, and just made the attitude of others worse. It is pretty obvious that people are not at all happy with Avista.
I think I am with most others in the region when I say that, especially considering the financial fiascos of a few years ago, Avista should lose its status as a private company, and again become a public utility. It performed lots better, from a public-service standpoint, when it was. And just so there is no mistake about that, yes, I mean that I feel it has been mismanaged.
I was rather surprised to see how many others appear to feel the same way.
spokanecougar on February 18 at 5:36 p.m.
Avista is a monopoly that should not exists. For them to ask for even more rate hikes is ridiculous. As many have mentioned here, during the worst recession many of use will ever live through they continue to rake in record profits is just amazing while people continue to be unable to heat their house because Avista needs more rate hikes to increase their record profits to satisfy their shareholders.
Dan, you are disgusting and gross, trying to come in here and defend the record profits from this monopoly is disgusting. You will find very few people, except ones that work at Avista and are benefiting from these record profits, defending this horrible, horrible company.
Shylock13 on February 18 at 5:39 p.m.
After Avista gave far too much money to stockholders, and TRUMPETED the reduction in rates for which they had no choice, they now want to RAISE rates! Please note that spokescreature Dan has not responded at all to my last questions (please see above).
All of us who Avista preys on must tell the public utilities commissions of both states how we feel. And we must keep doing so!
By the way, how are the public utility commissioners appointed? Do any of them own stock in Avista? Does anyone who appoints them own stock in Avista?
In Massachusetts, I lived in a city that had a municipal power plant. It gave me the lowest electric rates in the Commonwealth!
Let’s hear from Dan!
Shylock13 on February 18 at 5:40 p.m.
I predict that Dan will not respond. Or, if he does, he will not answer any, let alone all, of the questions I and others have raised!
HankTingler on February 18 at 5:53 p.m.
Most trolls get paid nothing. I wonder how much Dan makes?
SugarShane on February 18 at 6:52 p.m.
Is anyone really surprised? Im sure they will get the rate hikes as requested.
Dan_at_Avista on February 18 at 7:36 p.m.
William,
In both Idaho and Washington the utility commissions set the ROI for our company. You’re right, its around 10%. You noted comparable rates for CDs, savings and checking accounts - which are all pretty low right now, but also low, is the risk associated with investing in those options, which is why they pay a lower return. That’s not an Avista thing - that’s the free market. The way our utility - and many other companies are set up, is that the investors take the risk, not the customers, which is why investors earn a return. Recently we haven’t even earned our allowed return, but I know most individuals aren’t seeing a similar return on their investments, so I see the conflict.
I’d like to address some of the questions you asked. I can’t say exactly how many of our executives or employees own stock, but I would guess many do. But I suspect your question implied that ownership in the company was somehow improper. That’s just not accurate. Increasing the dividend of any company increases its attractiveness to shareholders, and keeps Avista comparable to other investor-owned utilities. This isn’t what’s driving up rates, its the rising cost of energy.
Albert, your note about companies in a recession and Walmart is an interesting one. In a down market people chose to buy less products from a store, yet few cut back on utilities in dramatic fashion, for obvious reasons. Utilities and retail stores are pretty different which is why our returns look different. Yes, Avista is a regulated monopoly. No question. That’s an accepted business model throughout the country for utilities.
I’ve read every comment above (yes, from spokanecougar too) and I get it. Nobody wants their rates to go up and I certainly understand that, but what’s driving rates is the cost of energy and increasing demand, not the return to shareholders. I’m on this forum to try to explain the reasons and answer questions. It may not be a perfect way to reach each of you, so I’d be more than happy to discuss this topic or any other at the Avista Blog www.avistautilities.com/blog , you can also e-mail me directly at conversation@avistautilities.com If this format isn’t working for you - let me know what I can do. I appreciate all your comments and I hope I’ve addressed most of them.
-Dan
zelda on February 18 at 7:48 p.m.
Dan would like us to believe that he’s just a regular Joe who happens to work for Avista and since it’s such a stand-up company, he’s taken it upon himself to speak on its behalf. That doesn’t happen. He is not posting information here without it being formulated and cleared by the company. There’s no such thing as an unofficial spokesman.
He’s regurgitating corporate talking points. At least he’s taken the humane route and isn’t subjecting us to the PowerPoint version.
Dan_at_Avista on February 18 at 7:56 p.m.
Zelda, I’m sitting in my living room, just about to put the kids to bed. No lawyers or content-approvers in sight. No hiding here, I speak on behalf of the company, but we’re not really breaking new ground with this discussion. We don’t need “corporate talking points” to discuss the facts and the issues that concern us. And if you want a powerpoint, I’ll get you one. Oh, and thanks for the HAL 9000 comment, that really made my day.
-Dan
spokelooneh on February 18 at 8:14 p.m.
I remember when my good friend, a neighbor, who worked for Avista was transferred to Texas, circa 1993-94. I was like, what, why are you being transferred to Texas of all places? “I’m in the energy trading side of Avista”, he said. Oh. OOOO-K, I said.
Peak of the energy manipulation scam back then. Enron, and the rest, Avista didn’t have clean hands during that major scam period either.
What Avista REALLY wants to know? How much will you pay for electricity when it’s 20 below outside, or 105 in the shade.
Orange on February 18 at 9:21 p.m.
Still like paying my $19 avg power bill a month from Grant County PUD. I also have a place in Spokane paying about $300 a month. I think what Dan from Avista is trying to say is Avista will continue to raise rates, and bathe in the profits. While you and I complain, pay our bills, and can do nothing about it but blog this little newspaper.
Scoutster on February 18 at 9:56 p.m.
Jeeesh, people. What’s with the personal attacks on poor old Dan. He’s just got a job to do. I will bet most of us have had to do things on behalf of our business or org. we didn’t want to do (I can’t imagine he WANTS to listen to the blather), but it’s his job. Give him a break.
To me the issue is whether it is right to privatize an essential utility. In the good times, few people cared…hell, we could be Avista shareholders too, and so what if rates went up, we’d be doing ok. Let ‘er rip!
The worm has turned, and now the idea of private companies (who are soulless, indifferent entities interested, ultimately, in one thing above all : quarterly profits) holding the meter on our heat instead of our neighbors doesn’t sound so good. We created Avista. We can kill it (if we can buy enuf politicians or pass an initiative).
zelda on February 18 at 9:57 p.m.
I say give Dan his own column. He could be the Avista embed at the S-R. Oh, wait. Bert’s already doing that job. Still, they’d make a good team.
flathead on February 18 at 10:17 p.m.
After reading the article above about the overall reductions in rates in the last year, along with the impending request from Avista to raise rates, I have to add my comments to the fray:
Avista’s rates are regulated so they have to continually request rate changes as the market changes. If it takes 11 months to get a rate change approved then I would always be asking for rate increases since by the time it got into review, the market may have changed. Since this is a monopoly like most utilities, the State oversees these requests and only allows changes as warranted by the circumstances. If you are interested in having your voice heard, there are hearings and forums for public input.
I have personally dealt with people in Avista’s management recently and they have been very open and helpful. I think Dan’s willingness to answer questions in this forum is refreshing and a whole lot better than you will see from Steve Tucker, Cathy McMorris Rogers, Tim Eyeman, Ozzie, Mayor Verner or any of the representatives of other high profile entities in the region. Try to get the director of Eastern State Hospital to throw in a comment on trips to the fair.
I don’t like rate increases any more than anyone else, but when I see that the rates are adjusting on a regular basis in both directions, I think the system is working fairly well.
my 2c
PlanB on February 18 at 10:53 p.m.
Dan, there will never be personal attacks from me and I appreciate someone from Avista posting and being willing to take the inevitable e-punch.
However, saying that a regulated monopoly is an accepted business model is just wrong. The fact that they exist is not proof, and some of us don’t accept it at all. FDR tried like hell to eliminate the scourge of private energy utilities and allow the people to create PUD’s. But he was only partially successful and companies like WWP (Avista) used every trick in the book to resist it and to survive, much to the detriment of the people they “serve.”
The creation of Grand Coulee Dam was as much for allowing the creation of PUD’s as it was for job creation or irrigation.
twobit on February 22 at 6:10 p.m.
basic needs should be our freedom we pay but no profit
D Statler on March 03 at 10:40 p.m.
Thanks for your insight Dan, Please send the pretty girls out with coffee again next time I picket your corporate headquarters again.They were very nice too.