Spokane7
68°
May 17, 2011 in Idaho
Avista seeks rate hikes
Average bill would rise $7.13 for electricity, $3.26 for natural gas
Avista Utilities is again asking Washington regulators for permission to raise rates.
The utility’s request, filed Monday, asks for a 9.3 percent jump in electrical service rates and a 5.1 percent hike for natural gas service by next spring.
For the average residential customer, monthly electric bills would go up $7.13 for a total of $84.14. Monthly gas bills would go up $3.26, totaling $66.71.
The request is pending before the Washington Utilities and Transportation Commission, which must make a decision within 11 months.
Avista has been asking for yearly rate increases, with the latest rate hike for Washington customers taking effect Dec. 1. Executives at the 122-year-old utility said the annual rate hikes are needed to pay for $1.2 billion worth of improvements to aging infrastructure over the next five years and to keep up with higher operating costs.
Avista plans to spend $250 million this year to upgrade 40- to 70-year-old power lines, poles, substations and other equipment to ensure reliable service, said Kelly Norwood, an Avista vice president. Upgrades at hydropower dams are also part of expenditures.
“We occasionally receive comments from some of our customers to the effect that Avista should cut its costs and ‘tighten its belt’ like other businesses are having to do in these difficult economic circumstances, and keep retail rates the same,” Scott Morris, Avista’s chairman and chief executive officer, said in written testimony to the commission.
Morris said he’s taken those comments to heart. As part of its cost-cutting, Avista has enacted hiring restrictions, offers a less generous pension plan to new employees and refinanced long-term debt to lower interest payments.
But Morris said the cost savings don’t cover the amount that Avista needs to spend to update its generating and transmission equipment. Some of the work is mandated by national reliability standards.
Avista’s pending request is likely to undergo close scrutiny from regulators.
Last year, the Utilities and Transportation Commission approved a rate increase that was about half of Avista’s original request after the utility reached a settlement for a lower amount. Commission members also chastised the Spokane-based utility after an audit uncovered that Avista had incorrectly billed ratepayers for $38,000 in costs that should have been borne by the company’s shareholders, including professional portraits and first-class travel for the board of directors, charitable contributions and advertising to enhance Avista’s image.
The flagged items were not included in rates. Avista agreed to conduct an internal audit and train employees to reduce errors.
Public hearings on Avista’s current rate proposal will be scheduled later, said Marilyn Meehan, a spokeswoman for the Utilities and Transportation Commission. In the meantime, the commission is accepting written comments on the proposal.
In the most recent request, Avista is seeking $44.5 million in additional revenue, which would include a 10.9 percent return on equity for the shareholders. Return on equity is the amount earned on a common stock investment. Over the past five years, Avista’s return on equity has ranged between 5.6 percent and 8.1 percent.
Morris said Avista isn’t the only utility that’s asked for more frequent rate increases to keep up with costs. Throughout the Northwest, nine public and investor-owned utilities have had new rates approved since the beginning of 2010, he said.
Even with higher rates, Avista customers still aren’t paying the full cost of the capital upgrades, Norwood said. Utility customers pay about $100 million annually for capital upgrades through their bills. The rest of the money comes from borrowing and shareholders through stock offerings.
Avista is also considering asking Idaho regulators for rate hikes.
The utility recently posted robust first quarter earnings of $41.9 million, a 45 percent increase from the first quarter of 2010. Norwood said the 2010 earnings were abnormally low as a result of a record-warm winter and reduced hydropower generation.
Miners to return to Lucky Friday 
lewis8457 on May 17 at 5:31 a.m.
yes time to raise the rates again their CEO needs another million a year to live in Spokane. Imagine folks $400,000 a month paycheck.
Orange on May 17 at 6:35 a.m.
To the Commission, please vote no. Check out their past “profits” and pay bonuses first. Spokane is tired of Avista’s monopoly on our lives.
SpokyDaBear on May 17 at 6:37 a.m.
Yeah! Another rate increase. Every year they ask for a big rate increase and ever year they get it.
Orange on May 17 at 6:41 a.m.
I like the front page of this website. An Avista PSA on costs for Avista. Lets do a PSA on their wages and salaries.
greyhound2 on May 17 at 6:50 a.m.
In the erroneous costs billed to ratepayers, they forgot to add campaign contributions to elected officials to bribe them to appoint agreeable rubber stamp commissioners.
iskixc on May 17 at 7:02 a.m.
Avista….ENOUGH!!! Where’s our old Washington Water Power??? The ecomony is hurting, people are hurting, people are struggling on less income, and Avista continues to want yearly increases! We the people needs to start speaking out. Isn’t this public water they are using? How about we charge them for the water? When these CEO’s finally start taking pay cuts like the rest of us, earning a normal salary…I vote no!
Washington State Commission I hope your hearing this!
toliveanddieinla on May 17 at 7:20 a.m.
where would spokane be if we didnt have snap energy help ,tyvm snap for helping my mom every year ,my mom has a hard time paying avista bill , a real big house and she cant sell house bad economy ,would like to see avista get investigated see if they are a monoply,remember gates microsoft was trying to corner computer market monoply and got in trouble so lets get another company in spokane to lower prices , that company will have less staff to do it its called downsizing get rid of to many ceos you only need 1 not 20 get a brain and quit robbing spokane residents, how about charging them for using the water of spokane river i dont know if they do pay for using it maybe dumb dan from avista can tell me if they to pay spokane city or county ? have a nice day spokane and avista can go to hell
Scoutster on May 17 at 7:35 a.m.
Time to co-op these greedy pr*cks.
This increase has nothing to do with the costs of power. It has to do with feeding the bond and share holders of Avista.
We who feed the meter are just serfs.
Blacksheep3 on May 17 at 7:36 a.m.
The latest rate increase happened only 5 short months ago, now Avista is asking for another increase. Avista damn well knows that they WILL get a rate increase, it just won’t be what they’re asking for. Like any good negotiator. Go in asking high and come out getting exactly what you really want/need. My Grandpa use to work for WWP. And I was proud to say that. Now, I’m ashamed of what Avista has become. Morris can take his $600,000 plus base salary and “stick it where the sun don’t shine”.
tea42 on May 17 at 7:48 a.m.
Maybe we need to talk to the Governor, as she appoints (controls) the Utilities Commission. We the people continue to get screwed as the executives (and employees) of Avista earn far far more than the local average wage. We are being ripped of by a monopoly, and our politicians are in on it. Also are you aware that during most of the year Grand Coulee dam is only producing at about 20% of it potential?? Why you say? Because if the government let it put more power into the grid, the price of power would go way down. In other words, we paid to build the dam but can’t benefit from it because that might hurt Avista and its greedy executives.
monkeyman on May 17 at 8:00 a.m.
It’s that time of the year again? I thought the Grinch came later… Perhaps he is proactive and the bills will go up at xmas time?
DickAdams on May 17 at 8:02 a.m.
Mayor Verner has a smile on her face time will not wear off. The city cash register is going co-chink with the increase in the city utility tax revenue. Remember folks, with a fixed rate tax, it means every time Avista gets an increase in the user rates it means more city utility tax revenue. And, don`t forget, Verner and her financial guru Gavin Cooley are behind closed doors thinking about increasing the city utility tax rate again. And another reminder, the reserve accounts the users have been charged for was borrowed by Verner and Cooley to the tune of $4. million to be paid back over the next 25 years at $250,000.00 per year. That means, the amount of reserves needed in the near future will have to be made up some way. Talk about giving the city utility users the shaft. Big time.
westerly on May 17 at 8:04 a.m.
Avista looks at other states rates, Spokane is low! So they have room to grow that rate. If other cities, states pay more than Spokane, Avista feels rate increase is justified..keep up with other utility rate levels.
eagleproducer on May 17 at 8:07 a.m.
I can’t wait for Dan, Dan, The Ofuscation Man to trot out the usual rationale that Avista must pay top dollar to recruit and retain the type of talent it takes to wring a profit from a legally protected monopoly that provides an essential service/product.
Ninch on May 17 at 8:20 a.m.
Most of the comments here are only an emotional gut reaction as well as lack of careful reading. For example: 1. The extra executive costs, lobbying, etc. are not (and never have) been included in the rate request. 2. The rates requested now will not be effective until December 1, 2011… a year after the effective date of the last rate request. 3. Few remember (or even bother to check) that at other times Avista reduced rates in the near past. 4. What does not anyone understand about upgrading/replacing very old infrastructure? Because you surely will be cussing and whining when you have power interruption from a failed system.
FYI: Avista does not control Grand Coulee Dam (the federal agency Bonneville Power). Coulee Dam was built for several users: irrigation, flood control, and electrical power generation. On top of that there has to be enough water left behind dams so that aquatic life can survive.
FYI: No investigation needs to be made into Avista being a “monopoly.” There is plenty of disclosure and oversight by the Public Utilities Commission which holds public hearings and takes public comments on rate changes. So quit whining/falsely accusing and instead take advantage of the public comment opportunities.
FYI: Avista provides a large sum of funds toward the SNAP energy assistance and other community energy assistance programs to supplement federal and state funds.
BTW: With a proposed return on equity of 10.9%, I would be looking into buying Avista stock… which as noted shareholders and stock offerings also help pay for infrastructure improvement.
P.S. Corporations are not greedy or evil just because they want to stay in business, improve services, and make a profit. I myself am looking forward toward a more modernized power grid and safer natural gas pipelines.
Ninch on May 17 at 8:30 a.m.
Uh… A big mistatement by a poster with “Imagine folks $400,000 a month paycheck.” The base CEO salary is just over $600,000 with additional monies in performance cash incentives and stock awards. That with pension plan makes 2010 earnings at about $3.25 million… which is pretty conservative for a corporate CEO.
Anyway do the math or a Google search first next time. Facts still do mean something these days.
DickAdams on May 17 at 8:51 a.m.
westerly, give me a break. Minneapolis, Minnesota rates are cheaper than Spokane`s. Figure.
mdoodle on May 17 at 8:53 a.m.
When is it going to end? This is not a good time for a rate increase for obvious reasons but as always, what Avista asks for, Avista receives - even if it’s not as much as they had asked for. And everyone whines and complains about it until it’s no longer on the front page of the newspaper. After that, everyone shuts up and pays their bills, and nobody says anything until the next inevitable rate increase.
Meanwhile, we’re expected to believe that Avista didn’t realize they didn’t have enough money for their 40-70 year old infrastructure to be modernized? This dated equipment has been in place prior to, throughout, and will be there invariably after the “recession” — so why is it necessary that these updates be made right now? Avista should be maintaining what they currently have for the time being, like everyone else, making updates as time and money allows. If the stakeholders wish to continue receiving their exorbitant profits, and decide they MUST make these updates now, then they should absorb any costs above what is funded, not the ratepayers.
gmorton on May 17 at 9:09 a.m.
Heh. I see the free lunchers are out in force.
One says, “how about charging them for using the water of spokane river …?” Another echoes, “Isn’t this public water they are using? How about we charge them for the water?”
Great idea. That would be an additional cost that would be passed through on your utility bill, which would then be spent by those savvy pols and bureaucrats at City Hall.
You’re not paying for the water, folks. You’re paying for the dams, generators, transformers, and the thousands of miles of distribution lines needed to extract power from that water and deliver it to your house, and the salaries of all the people who know how to make it work.
And of course there is the usual whining about CEO salaries from folks who can’t grasp the concept that people are paid what their services are worth to the company, and that the services of some people are worth many times more – even hundreds of times more – than those of others.
On yesterday’s story on the same subject several commenters proposed that Avista be (somehow) converted to a public utility. You might check to see how Avista’s electric rates compare with those of the largest public utility in the state:
Average residential electricity use in the US is 920 kWh per month (2008).
http://www.eia.doe.gov/tools/faqs/faq.cfm?id=97&t=3
Here are the current rates for 920 kWh for Avista and Seattle City Light:
Avista (private):
Base charge: $6.00
First 600 kWh: $39.76
601-920 kWh: $24.67
______________________
TOTAL: $70.43
http://www.avistautilities.com/services/energypricing/wa/elect/Documents/WA_E_shortcuts%20-%2012.01.10.pdf
Seattle City Light (city-owned):
Base charge: $3.47
First 300 kWh: $13.83
301-920 kWh: $59.27
______________________
TOTAL: $76.57
http://www.seattle.gov/light/accounts/rates/docs/2011/Jan/2011Jan_rsc.pdf
NOTE: City Light applies its rate step on a daily basis; Avista on a monthly basis. So the City light daily rates are multiplied by 30.
IRun on May 17 at 9:10 a.m.
@Ninch… $3.25 million for a salary/compenstation is conservative for a CEO??? Ummm… so why did the CEO of a power company that is localized get roughly twice the salary and compenstation of the CEO for Amazon the world’s largest online-retailer? http://www.seattlepi.com/business/article/Amazon-CEO-s-compensation-fell-6-percent-in-2010-1355184.php
Ya… $3.25 million is too conservative for a CEO who basically doesn’t have to do anything to ensure the company makes a profit since its business model is essentially a monoply?
Dan_at_Avista on May 17 at 9:24 a.m.
It’s nice to see we have several reasonable commenters on today’s story. You don’t have to agree with a rate increase request to be open-minded enough to learn the reason’s why. We’ve put together a website detailing the increase request and I encourage you to check it out and then e-mail us questions. http://avistainfo.com/Home/RatesInAction.aspx
I’ll put the same offer out that I have for the past year or so – instead blandly complaining about executive compensation, high rates, PUDs and other issues on these comment boards - come see what we’re doing with the money we’re requesting. Meet with me. I can show you where the money is going. If you’re not up for getting into a muddy ditch with a gas crew or climbing a power pole in 30 MPH winds, maybe we could get together for coffee and talk through your concerns. No agenda and I promise to pass along your concerns. Send me an e-mail to see if we can work something out: conversation@avistautilities.com I’ll reply no matter what.
gmorton on May 17 at 9:59 a.m.
Dick Adams wrote,
“Minneapolis, Minnesota rates are cheaper than Spokane`s.”
Not according to Xcel Energy’s rate schedule for Minnesota:
Oct-May: $58.42 x 8 = 467.36
Jun-Sep: $67.74 x 4 = 270.96
Customer charge: $6.65 x 12 = 79.80
___________________________________________
Subtotal: $818.12
7.58% surcharge: $62.01
___________________________________________
TOTAL: $880.13 (12 months)
Monthly Average: $73.34
http://www.xcelenergy.com/staticfiles/xe/Regulatory/Regulatory%20PDFs/Me_Section_5.pdf
nslopeofw on May 17 at 9:59 a.m.
Dan-
My Dad worked for an electric co-op in Alaska when i was growing up, and later when i bought my first house, i used said co-op. Its name is Matanuska Electric Assoc. Seeing how it was run, and what they charged, shows me Avista is gouging. MEA bought ALL of their power, and still gave checks back to the customers at the end of some years. The CEO/administrators make BIG bucks, and the linemen are union, and as for wind, there are much worse and constant winds there, yet, somehow, they were able to operate in an incredibly hostile environment, and still not gouge.
I realize Avista is a private company, out to make a profit, but they are also a monopoly, and as such, should either be required to keep prices at a minimum, or break them up and get rid of the monopoly. I also understand you work for them, and are probably proud of the company, but again i would have you think on the word monopoly.
greyhound2 on May 17 at 10:03 a.m.
Interesting comparison with Seattle City Light and Avista. Notice that heavy weight users are paying a disproportionate share compared to average households; $59.27 compared to $24.67 for large industrial users.
misjustice on May 17 at 10:12 a.m.
I wish I could ask for a rate increase on my income. Avista wants increase, gas prices increase, city water/utilities increase, food has increased, medical premiums & co-pays have increased. I can go on & on………yet those on disability & Soc Sec have had a stay on any pay increase for 2 years now. Soc Sec Medicare is increasing beyond any reasonable rates & now the military insurance for retirees is increasing.
Hard to keep our heads above water now days….when do we get an increase to just tread water? Sad situation that Avista CEO’s make so much money when the majority of residents in Spokane need assistance from SNAP & other charities.
tea42 on May 17 at 10:20 a.m.
Dear Ninch, no where did I suggest that Avista controls Grand Coulee Dam, what I said was the federal government restricts power output at federal dams, so as to keep rates from going down, and there by protecting privately owned concerns such as Avista. If the BPA where to be shifted to the private sector we would have, for most of the year an over supply of power and there for lower prices ie competition. Whats a monopoly??
In economics, a monopoly (from Greek monos / μονος (alone or single) + polein / πωλειν (to sell)) exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. Commenting to the WUTC?? I and many many others have done this time and time again and the only response we get is “Thank you for your input”.
I think that about sums it all up DAN. By the way the average wage in Spokane county is around $33,000 per year. How do you earn in total compensation Dan? What is the average wage for all Avista employees? What incentives are there for Avista to control any costs when they can simply dictate the price of there product? Dan wholesale gas prices continue at multi multi year lows, where are our (the customer) price savings from all those many many rate increases approved to offset high wholesale energy prices?? I know we will be getting a very small reduction as Avista has agreed to give up a emergency surcharge approved in 2001 when prices skyrocketed, eleven years later the surcharge is being removed. I wonder who came out ahead on that one?
Hmm, who seems to be winning and who seems to be getting the shaft here.
gmorton on May 17 at 10:27 a.m.
nslopeofw wrote,
“Its name is Matanuska Electric Assoc. Seeing how it was run, and what they charged, shows me Avista is gouging.”
Here are Matanuska Co-op’s current charges for 920 kWh:
Base charge: $5.65
920 kWh: $95.51
Additional charges: $32.45
_________________________
TOTAL: $133.61
http://www.mea.coop/index.php/member-service/rates/32-current-rates
flutieflakes on May 17 at 10:28 a.m.
Dan, honestly, I don’t envy your job. Just remember, they’re mad at “Dan_At_Avista”, not “Dan (whatever your last name is)”.
That said, why does Norwood state, “Even with higher rates, Avista customers still aren’t paying the full cost of the capital upgrades”?
If Avista’s earnings for 2011 end up being in the range of $100-120M, as the CEO expected in the 10-Q, and next year’s revenues increase by $45M, and the rates Avista pays for the energy remains somewhat low (as it has the previous two years), then that would be earnings of at least $250M for 2011-2012 years. In other words, the first year of capital expansion consisting of purchases of long-term fixed assets would be paid for by the end of the following year. If revenues stayed the exact same after that (in other words, no more rate increases, which isn’t likely to happen), the entire $1.2B expansion would be paid for in about 10 years. This expansion would represent an increase of Avista’s total assets of at least 30%.
My point? Taking an exceedingly conservative view of Avista’s future, utility customers alone would have completely paid off the costs of long-term infrastructure, the previous versions of which lasted as long as 40-70 years, in about 10. I don’t know what the estimated useful life is of this property Avista is investing in, but it had sure as heck better be longer than that.
It annoys me that customers are expected to simultaneously fund Avista’s growth in size, returns/earnings, and executive salary, while shareholders (70% institutional, might I add) are compensated for risk that doesn’t even exist. If they are going to expand while simultaneously providing higher returns on equity, they should take on more debt instead of just coming back to the magical ratepayer wishing well. Isn’t that the whole reason for keeping the dividend as high as it is? Better access to capital? All these rate increases do, in combination with the growth of fixed assets and dividends, is artificially prop Avista’s share price up, like a puppeteer pulling the strings of a marionette, and rate payers are essentially told to “go get their f’n shine boxes”.
/early morning rant. Best of luck to you today, Dan.
cdaterry1 on May 17 at 10:55 a.m.
Oh please cut the crap about the avista ceo being “paid what they are worth”…..3+ million dollars for running a utility????……it is Not Rocket science….also don’t forget the bank of minions being paid +$300k/yr underneath the CEO……why is anyone at this utility being paid over $200k/yr??….it is just a utility - the ecnomy has changed and is no longer sustainable at previuos methods of operation…..the party should be over for big salaries - these people just maintain a utility - it is time for utilities to be owned by the public for the public good - not for stockholders and their “helpers” the stock brokers and banksters
gmorton on May 17 at 11:03 a.m.
tea42 wrote,
“Whats a monopoly?? In economics, a monopoly … exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.”
Yes. Avista, and most other public utilities, are monopolies. The City of Spokane also has a monopoly on water and sewer services; Seattle City Light has an electric monopoly in Seattle. Those are all *natural monopolies*, which means that the service or goods they provide can only be *economically* provided by one supplier in a given area. For example, if someone builds a dam on a river to generate electricity, someone else cannot also build a dam unless they go downriver a few hundred miles, since the river’s energy to that point has already been captured by the first dam. Also, most cities do not want power poles and lines from a half-dozen utilities cluttering the streets, or half-dozen sewer lines undermining them. Furthermore, were there a half-dozen electricity suppliers in a local market, rates would be much *higher*, because each of those utilities would have to build its own distribution network, each serving 1/6 as many customers. So the cost of each mile of line would have to be paid by 2 customers, instead of shared among 12.
Nonetheless, the same problems which arise with market monopolies and *de jure* monopolies also plague natural monopolies – lack of competition allows monopoly pricing. But since creating a competitive market is not feasible for natural monopolies, there are only two solutions – “socializing” the utility, as with city water, or regulating it. You cannot get rid of it.
Scoutster on May 17 at 11:07 a.m.
I wonder how good a CEO they could get for only $2 million dollars?
Probably trash.
Dan_at_Avista on May 17 at 11:09 a.m.
Flutieflakes asked “ That said, why does Norwood state, “Even with higher rates, Avista customers still aren’t paying the full cost of the capital upgrades”? ”
This is a paraphrase by the reporter, but I can address the comment in general. Each time we file for a rate change we have justifications documented for each amount listed. The documentation we send over to Olympia could fill a small moving van.
So when we file for a certain percentage – say 9.3 for electric residential customers – the UTC then decides what increase, if any, we can then charge our customers based on the information we provide them and they study. Our expenses are not guaranteed to be paid by increases as we don’t set the rates. As a regulated utility, the regulators set our rates and they do not have to rule in our favor, meaning that the eventual amount they decide could be below what we asked to recover. So, customers wouldn’t be paying the full costs of capital upgrades that were included in our filings. Those costs (not recovered in rates) would likely come out of those profits that we’re getting hounded about on these boards.
gmorton on May 17 at 11:13 a.m.
cdaterry1 wrote,
“Oh please cut the crap about the avista ceo being ‘paid what they are worth’…..3+ million dollars for running a utility????……it is Not Rocket science . . .”
Heh. If that is so, you should offer your services to Avista for, say, $2 mil. After all, anyone can do it.
Avista pays what it does because that is what it must pay to get (and keep) the people it wants in the positions it wants them to fill, just as football team owners, Hollywood producers, and software companies pay to get the players, stars, and programmers they want for their projects.
greenlibertarian on May 17 at 11:26 a.m.
You serfs are awfully bitchy.
Avista only wants to raise your rates by 10% in order to give their shareholders a 35% increase in rate of return.
Pipe down, punks.
Avista will throw a few more shillings at SNAP next year so gramma won’t freeze to death.
cdaterry1 on May 17 at 11:31 a.m.
gmorton wrote,
“Heh. If that is so, you should offer your services to Avista for, say, $2 mil. After all, anyone can do it.”….absolutely - many many others in this country could do this job and for a lot less $$ - it is not rocket science….what is Fair to our society? gouge the rate payers for over paid corporate types?….where else are they going to work? as the downhill slide in our economy continues……the pro sports economics (completley overpaid players) will also continue the dumbing down of America
must be a stockholder “drinking the koolaid” - typical of what is and has been going the wrong way in this country for years….yes, stockholders are entitled to a return on their investment……but a utility that is used by all people should not be gouging rate payers with overpriced compensation and all of the corporate fluff that of course goes with….it is just a utility
nslopeofw on May 17 at 11:32 a.m.
Gmorton,
I also wrote that they give money back at the end of the year, and that on average, EVERYTHING in ALASKA is overpriced. The average wage is $45k as well, and each Alaskan is given a PFD check (aprox. $2K last year) every year to offset some of this overpricing. So, the prices are based on having a min. income of $47K per year, with checks back.
nslopeofw on May 17 at 11:34 a.m.
Dan_at_Avista-
Imagine what they would OK if you only asked for 3%.
gmorton on May 17 at 12:03 p.m.
nslopeofw,
Spokane County Median Household Income: $44,799
http://www.ers.usda.gov/data/unemployment/RDList2.asp?ST=WA
Alaska Median Household Income: $66,712
http://www.ers.usda.gov/data/unemployment/RDList2.asp?ST=AK
Annual Electric Charges as % of MHI:
Spokane County: 1.89%
Alaska: 2.40% (based on Matanuska rates)
Alaska MHI probably does not take into account any dividends returned by the co-op.
EdubU on May 17 at 12:07 p.m.
That’s ironic, not one right wing whacko has commented on this thread defending the Avista CEO and it’s administrators outrageous salaries. You know those of you who are defenders of the uber-rich working tirelessly building their fortunes through hard work, sacrifice, and hardship. So what side are you on now?? The Avista CEO is only getting what he’s entitled to by your way of thinking. The rest of us need to leave him alone.
jddavis on May 17 at 12:22 p.m.
I suggest all those not happy with the CEOs’ salary buy Avista stock, vote in new board members who vow to lower his salary, then sit back and watch your stock value increase!
I am tired of being overcharged for Spokane water and sewer!
Thoreau on May 17 at 12:36 p.m.
Tesla envisioned wireless electricity service. I hope to see that day come.
hamrsrscarry on May 17 at 12:53 p.m.
Avista is doing an awesome job managing a non-renewable resource (water) and controlling the dangerous force of electricity. If Avista wasn’t there we’d either drown in floods or die of thirst, plus, can you imagine if electricity wasn’t contained in wires? It would cook you alive!
It’s a dangerous job what they do. Please consider that more carefully before you start complaining.
A world in which electricity and water were free to do what they wanted is a world none of us could survive.
misjustice on May 17 at 1:15 p.m.
***the UTC then decides what increase, if any, we can then charge our customers based on the information we provide them………..***
This says a whoooole lot! ….BASED ON THE INFORMATION AVISTA chooses to PROVIDE THEM……
WOW!!!!!!!
zelda on May 17 at 2:56 p.m.
Uh, oh. The discussion goes sideways when somebody brings up Tesla.
The larger picture, to me at least, is how publicly traded utilities operate in the U.S. There is a commonality of culture and practices — not much variation from Avista to PG&E to Florida Power & Light to ConEd. It’s very much institutionalized. They all devote a hefty amount of money to “customer relations.” It’s hard to sort out the propaganda from the truth. As with many things, it’s what they choose not to talk about that matters. And that’s hard to discern.
The issue of executive pay is quite valid. The pay is determined by the board’s compensation committee which in most corporations is composed of buddies and cronies. The CEO and CFO typically serve on boards of other companies thus creating a closed system of “you scratch my back and I’ll scratch yours.”
When there’s nothing to stop this feedback loop, salaries skyrocket. I disagree with @gmorton about this being reasonable compensation because companies are paying “what the market can bear” akin to Hollywood movie stars. There is no more ruthless meat-grinder of talent than the entertainment industry. They can chew and spit out talent in a matter of months.
Executives, on the other hand, have much longer careers. Plus, there is no longer a downside if they fail. They’re paid massive signing bonuses to join the firm, lavished with bonuses, options and perks, and if they’re fired for poor performance they get gold-plated platinum parachutes to leave. They make a mockery of the notion of pay-for-performance. It’s heads I win, tails I win.
I’m not singling out Avista; that company and other private utilities are just a subset of an executive compensation racket that’s been growing horns and a tail for years. It’s completely out of whack. A daily read of the WSJ is enough to tell me that the majority of CEOs are selected for traits that the average person would find repellant. And, to be clear, I’m not saying Scott Morris is another Dick Fuld but there is a continuum if you get my drift.
Scoutster on May 17 at 3:05 p.m.
Yup…the fact that they are publicly traded and beholden to shareholders and not customers means that there always has to be profit sucked out of the pockets of consumers.
That’s how it works. I’m all for capitalism, but here it is
A) a monopoly (the essential feature of capitalism is competition)
B) an essential service.
reservedparking on May 17 at 3:19 p.m.
ummm….. @jdavis?
“I am tired of being overcharged for Spokane water and sewer!”
Just in case you missed it, Avista Utilities (the topic of this particular thread) has absolutely nothing to do with water or sewer rates in the City of Spokane, or anywhere else. They sell electricity and natural gas.
Have a nice day.
greyhound2 on May 17 at 5:10 p.m.
Much discussion about executive pay. Here is how it works: First, appoint people to the board who will follow all directions as they owe their paychecks and allegence to you. Then, contribute to political candidates who will rubber stamp your requests or lose their jobs in campaign finacing. Third, as stockholders have little to nothing to say about anything as long as they are getting their cut, your $millions are a shoe-in to run a monopoly where no one has any choice, and their is no possibility of going bankrupt as no one wants to freeze to death and you are a monopoly. What could be easier! A job to die for. What could be better!
gmorton on May 17 at 5:13 p.m.
Zelda wrote,
“They’re paid massive signing bonuses to join the firm, lavished with bonuses, options and perks, and if they’re fired for poor performance they get gold-plated platinum parachutes to leave.”
And they’re offered those signing bonuses, etc., only because the compensation committees and directors are their buddies and cronies, right?
Has nothing to do with the fact that a dozen other companies are prepared to match that offer, right?
gmorton on May 17 at 5:28 p.m.
But, Zelda, let’s assume that, along with CEO Morris’s $3 million compensation, that there are 17 other execs at Avista making $1 million or more (there aren’t, but that’s OK – its only an assumption).
So let’s fire them all and thus save $20 million. Avista’s sales in 2009 were $1.6 billion. Without that $20 million expense, they could have sold all those products and services for $1.58 billion. Your $70.43 monthly electric bill would have been only $69.55.
Would that 88 cents/month saving make you happy?
zelda on May 17 at 8:34 p.m.
If the only other comparables for U.S. CEO salaries are rock stars, actors and athletes, that’s a powerful testament that we have an entertainment-centric culture. Is that a sign that our society is at its zenith or its nadir? Do we have skilled executives or are they mainly impressarios? I’m posing the question because having a reward system based on entertainment comparables means that the nature of their work rests solely on perceived value rather than intrinsic value. When corporate boards validate that kind of entitlement, well, you get some very interesting behaviors. They do things because they can, not because they’re right. Excessive compensation pulls leadership ethics off their moorings.
gmorton on May 17 at 10:01 p.m.
Zelda wrote,
“If the only other comparables for U.S. CEO salaries are rock stars, actors and athletes, that’s a powerful testament that we have an entertainment-centric culture. Is that a sign that our society is at its zenith or its nadir?”
Neither. It is only a sign that market forces operate in the realm of business management just as they do in all other economic realms. It has no bearing on the historical “trajectory” of the society, if there is any such thing (other than as seen in retrospect).
“I’m posing the question because having a reward system based on entertainment comparables means that the nature of their work rests solely on perceived value rather than intrinsic value.”
I have no idea what “intrinsic value” is, or how it might be measured. CEOs are chosen based on estimates of what they can do for the company’s bottom line, just as actors are cast based on estimates of what they can add to box office receipts. Those estimates may prove to be wrong, but that is the working criterion.
zelda on May 17 at 11:19 p.m.
Perceived value : intrinsic value
all sizzle : no steak
The way they pick these CEOS now makes as much sense as putting your money on 36 red because they like the color. I don’t think market forces have anything to do with exec. salaries anymore. Business today is a barely regulated casino run by hustlers who produce few innovations other than financial engineering. Bite my tongue — but Avista and other utilities may be the exceptions. Flip the switch and electricity comes out. The same can’t be said of Wall Street. And I’ve yet to figure out the value-added of Facebook except as a vehicle to sell people more crap they don’t need, which for a lot of folks pretty much defines their life.
Squid on May 18 at 10:54 a.m.
Ahhhh, spring is here! The sun is shining, flowers are blooming, and the newly hatched Avista birds are in the nest, begging their regurgitated worm parts! No matter how much they are fed, they always want more. They keep getting fatter and fatter, but Mama and Papa are getting tired and weak. Soon, the little fellas will devour their parents with their never ending appetites.
Their equipment needs to be updated? The old saying of “A lack of planning on your part does not constitute an emergency on my part” comes to mind. Maybe they should have upgraded when the cost of metal was reasonable and the economy was better? Everyone needs upgrades, but they upgrade when it’s feasible and necessary. Obviously it’s not necessary right now and if they have waited 70 years to upgrade, it can be done as needed and doesn’t have to all be done at once. When all upgrades are completed, will they restore our rates to what they were? Of course they will! Just like they restored our rates after the droughts were over and we had record snow pack.
Seems like only yesterday when they jacked us due to years of drought. Seems like yesterday when they jacked us for Katrina, even though our natural gas comes from Alaska and Montana. Seems like yesterday when they jacked us because it was more profitable to sell power to California. Seems like yesterday when they jacked us because they needed equipment upgrades. Seems like yesterday when they weren’t making a profit. What is going to happen when we have another drought?
Ever notice that ALL of the Avista heavy equipment and trucks are brand new????? That is part of the way they hide their record profits. They sell the “Old” one year of age equipment for pennies on the dollar, and show a loss. Spending big money every quarter, keeps the profit they show at a minimum. Paying huge salaries and bonuses helps too. Paying 10.9% dividends another great way to soak up profits. I know it’s a tax write off to buy new equipment for small business, but Avista doesn’t pay the same taxes as small business. Just curiously, does Avista own any airplanes or helicopters? Those are always great ways to suck up profits. Bet they have a fleet of airborne rigs that operate consistently.
Seriously???? 10.9% dividends? What other company pays those kind of dividends? Do the employees get stocks as bonuses? I suppose that would be a secret, but would explain a lot.
Why are our rates higher than states and counties that have no rivers, and no snow pack? Why are our rates higher, now that the sea of wind turbines are finally profitable? I realize that we don’t get the power from those wind turbines, but Avista is selling power to those that do. Does Hermiston and Vantage suck up all that power?
Will they be happy when our operating costs of powering our homes exceed the mortgage?
Keep sucking.
Squid on May 18 at 11:27 a.m.
Just curiously, how much did Avista pay for that header advertisement on the SR homepage? Why do they even need to advertise? It’s not as if they will get more customers if they do, or less customers if they don’t. Don’t they decide who their customers are and aren’t?
What is the purpose of advertising?????
It’s about time to boycott and rebel. Enough is enough.
In the real world, I can’t go on a spending spree and jack my rates in a recession. My costs are skyrocketing. Taxes, fuel, food, health care, and now Avista. I need equipment upgrades too.
STOP IT!!!
jddavis on May 19 at 7:59 a.m.
reservedparking—
Thanks for the keen grasp of the obvious. I was making a sarcastic remark, not so obviously pointing out how everyone is up-in-arms about Avista’s rates and ignoring Spokane’s rates, food prices, and the general overall cost of everything else.
In the future, I will try to lower the bar so you can follow.
westerly on May 19 at 8:28 a.m.
Here is the rates on PUD’s execs in Seattle area.
http://www.heraldnet.com/article/20110519/NEWS01/705199943
tea42 on May 22 at 8:45 a.m.
What incentives are there for Avista to control any costs when they can simply dictate the price of there product?
Marcus on May 27 at 12:06 p.m.
For all the rates listed i didn’t see and denotation that Zoning effects rates. A commercial building will pay more for using less and less for more.
But the real issues is… “On May 6, Avista reported first quarter earnings per share of 73 cents, well ahead of the Zacks Consensus Estimate of 64 cents. It was an increase of 40% from the same quarter in 2010.”
http://blogs.forbes.com/zacks/2011/05/27/avistas-yield-warms-up-shareholders/
kennyhuston on June 01 at 11:24 a.m.
Squid has a good point about the advertising … . Dan?