Spokane7
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May 19, 2011 in City
Clark: A jovial spin on Avista’s request for rate hikes
Hi everybody. It’s me – Dougie Kilowatt.
Avista Utilities has hired me to be its new power company mascot.
I know. I’m just as shocked (har!) as you are.
But there’s a lot of ratepayer grumbling out there. It all comes from Avista’s recent request to gouge us even more for our electricity and natural gas.
To head off the turmoil, Avista wanted a jovial and trustworthy spokesman to answer your questions about the proposed increases.
So let the discourse begin!
Q – How’d you get the job?
D. Kilowatt – Well, in all candor I wasn’t the company’s first choice.
Q – Oh?
D. Kilowatt – Yes. Avista really wanted someone who fit in more with its way of doing business. Unfortunately, Bernie Madoff couldn’t get a prison work release.
Q – So they called you?
D. Kilowatt – Actually they then called Arnold Schwarzenegger. He was all set to be Arnie Kilowatt until everybody found out about him fathering a kid with one of his housemaids.
Q – That was pretty awful, huh?
D. Kilowatt – Oh, I don’t know. He is The Sperminator, after all.
Q – I think we’d better get back to Avista.
D. Kilowatt – I’m here to help.
Q – OK. With the economy in a mess and so many people hurting, isn’t this the worst timing to go asking for a 9.3 percent raise on electricity and a 5.1 percent hike for natural gas?
D. Kilowatt – Ratepayers need to stop being so selfish. They need to realize that this isn’t about them. This is about the soaring price of gold.
Q – Gold? What are you talking about?
D. Kilowatt – Gold cufflinks, gold Rolexes, gold-plated toilet seats …
Q – Corporate assets?
D. Kilowatt – That’s one way to put it. Avista executives have luxurious sensibilities and, hey, the money’s gotta come from somewhere.
Q – No wonder so many people hate the power company.
D. Kilowatt – They don’t call us Avarice-sta for nothing.
Q – But what about all those poor folks who can’t afford to pay more?
D. Kilowatt – As a matter of fact, we just launched a special self-help program for our NGDBs.
Q – NGDBs?
D. Kilowatt – No Good Deadbeats.
Q – Ah. So what’s the program?
D. Kilowatt – Well, anyone needing help will receive a free copy of our new instructional pamphlet, “Clap your Hands and Stamp your Feet!”
Q – Does it tell you how to reduce your Avista bill?
D. Kilowatt – Whoa, what have you been smoking?
Q – So why Clap your Hands and Stamp your Feet?
D. Kilowatt – It’ll help keep you warm when we cut off your heat.
Q – That’s cold.
D. Kilowatt – Not really. You can wad up the pamphlet and burn it, too.
Q – According to a published news account, Avista will spend $250 million on fixing up old power lines, substations and other stuff. Is this what these rate increases are about?
D. Kilowatt – Oh, yeah. Power lines. Substations. You bet. That’s the ticket. Absolutely.
Q – You know, I’m shocked that a cynic like you would start shilling for Avista. What made you do it?
D. Kilowatt – They had me at gold-plated toilet seat.
Doug Clark can be reached at (509) 459-5432 ordougc@spokesman.com.
Recent stories by Doug Clark
Doug Clark: Roskelley’s candidacy is all downhill from here May 27, 2012 15- Clark: No clear inspiration for ‘Spokane Motel Blues’ May 24, 2012 6
- Professor’s ‘Motel’ mystery needs you to solve it May 22, 2012
- Clark: City ordinance shows lack of sound thinking May 20, 2012 21
- Doug Clark: Many wrongs, one big right in Zehm case May 17, 2012 24
Albert on May 19 at 6:42 a.m.
Doug, I just finished an article in “CFO Magazine” wherein Avista, because of their profit picture made the news:
“Avista Corp. replaced existing debt set to mature last April with new $400 million facility that expires in 2015.”
NOBODY is qualifying for these new “bottom rates” in this economy unless you have the corporate assets and proven income to get these super low rates. That is a fact.
Avista is rolling in money to qualify. SERIOUS. Now their expiring debt that is used to “qualify” for a rate increase, has not only been deferred at a far lower rate of interest, but frees up untold MILLIONS to pay to the stockholders and corporate profit goals.
PLEASE do tell me that Avista warrants this rate increase when they are documented by a leading accounting magazine as beyond profitable and floating in cash.
misjustice on May 19 at 6:53 a.m.
Dougie Kilowatt, will you be also replacing Dan, the corporate answer man, on the SR threads?
; )
cdaterry1 on May 19 at 6:59 a.m.
as the article said…”the economy is in a mess”….greed is good and rapant……awash in cash and it is not enough - gotta raise rates - irresponsible corporate nonsense
the corporate structure tells it all here and it starts at the top….why is anybody at this utility making more than 200k/year??….this is just a utility! - it is not rocket science!…these people who work there are not inventing or creating anything - they are just Maintaining a structure that everyone uses and has no choice as to alternatives
what justifies these compensation/benefit levels?…and do not forget there is a bank of minions inside this entity who think they are entitled to this level of compensation - corporate welfare just like this country’s entitlement programs - out of control
hunternomore on May 19 at 7:49 a.m.
LOL clap and stamp. That’s about it. They get away with it because they have a “monopoly”. Maybe we should get some non-profit energy company to come in like back east.
westerly on May 19 at 8:19 a.m.
Here is the rates on PUD’s execs in Seattle area.
http://www.heraldnet.com/article/20110519/NEWS01/705199943
Dan_at_Avista on May 19 at 8:38 a.m.
Doug, I’m always up to read a nice work of fiction. Kudos on giving me a little chuckle in the morning while also including the actual reasons why Avista filed the increase request – infrastructure replacement on an aging system for customer reliability. Maybe you could be a company spokesperson after all. Second career maybe? Send me an e-mail conversation@avistautilities.com
cdaterry1 on May 19 at 8:50 a.m.
westerly…interesting reference as to compensation levels…does this show what a corporate slush fund avista has become for stockholders and their alleged (as Warren Buffet would say) “helpers” - the stockbrokers and banksters?
of course danatavista will pass out the corporate koolaid and tell us all to go to the uitility commision - so they can listen to the serfs whining and “just do another study”…..just as instructed from wall street on how to quiet the masses
….dispicable compensation levels at avista - greed is rampant an good at avista for people who just run a utility…it is not rocket science
they create and invent nothing…they just maintain a utility….change starts at the top - but these poor inflated egos will not hear of it….they do not have to listen to anybody but wall street….the dumbing down of america continues
Albert on May 19 at 9:05 a.m.
Dan…ole Doug has way too much integrity to work for Avista.
greenlibertarian on May 19 at 10:17 a.m.
Here’s the CFO magazine article Albert mentioned:
http://www.cfo.com/article.cfm/14570354/c_14570395
––––––––––––––––
Dan, what, in brief, is the rationale for raising the rates on natural gas, when the wholesale cost of such has plummeted and is expected to remain extraordinarily low for at least the next 3 years?
Why does Avista need to raise the shareholder rate of return some 35% above what it’s been in recent years?
Dan_at_Avista on May 19 at 11:17 a.m.
greenlibertarian,
The cost of wholesale natural gas is a pass through cost for Avista. We purchase gas at various times throughout the year and different prices depending on the market. Because no one can predict the future, some of the gas purchased as a hedge (future) is priced above the going spot market price and some below like you mentioned. We true-up the actual cost of gas through what is called a Purchased Gas Adjustment or PGA. Here is the link to the details of the true-up in September 2010: http://www.avistautilities.com/community/blog/archive/2010/09/16/091610.aspx
So, the cost of the gas itself isn’t the single driving factor for our request. It involves the delivery of the gas and its storage. You can find those details here: http://avistainfo.com/Home/RatesInAction.aspx
I’d like to answer all your questions, but I’m not clear on your shareholder question; you’ll have to provide more information.
CougarGold on May 19 at 11:33 a.m.
Albert - I read that article you referenced and that GreenLib linked and I don’t see what the problem is. In February, Avista replaced a revolving line of credit that was due to expire in April. It doesn’t say at what rate. Further, the reason for a revolver is to provide a smooth cashflow when it becomes necessary to use it. It is, in fact, kind of the opposite of “rolling in money”. You are correct in that you need the income history and assets (short-term; accounts receivable and inventory for a revolver as that is the collateral) to support the loan facility but the point of the article is that banks are now providing these credit facilities whereas for a couple of years, they weren’t. Yes, Avista is profitable but they should be. That’s the point of business.
greenlibertarian on May 19 at 11:50 a.m.
westerly on May 19 at 8:19 a.m.
Here is the rates on PUD’s execs in Seattle area.
http://www.heraldnet.com/article/20110519/NEWS01/705199943
It appears Avista’s CEO is the highest paid utility CEO in the state.
greenlibertarian on May 19 at 12:04 p.m.
Averaging the 5.6 and 8.1 figures gives a 6.85% return on equity over the past five years.
Avista is asking for an increase to 10.9% return on equity, which amounts to nearly 1.6 times higher that the 6.85% average figure over the past 5 years.
Why does Avista think they need to increase shareholder return on investment so dramatically?
cdaterry1 on May 19 at 12:08 p.m.
as the greenlibertarian link could infer……
do avista’s compensation/benefit levels point to a corporate culture that is sustainable? of course it does - since all that needs to be done is just raise the rates - for stockholders, wallstreet and the banks of minions making 200k+ that work there
pass out the coprporate koolaid danatavista and march in lock step to the overpaid greed…then hand out some more alphabet phrasing to make avista look so complicated….blurr it all around and it looks like money
avista it is just a utility and not rocket science…the continual dumbing down of america
hgimhof on May 19 at 1:07 p.m.
“it is just a utility and not rocket science…”
@cdaterry1, you can argue all you want about the need for rate increases or high salaries, but you are completely off the mark when you underestimate the complexity of the utility business.
Having worked there for a number of years I can tell you that it requires a lot of very highly skilled and talented people to meet tremendous challenges. (somehow I snuck in under the radar, because I don’t have anywhere near the brains or ability that most employees there do)
Squid on May 19 at 1:46 p.m.
I haven’t ever met anyone who didn’t think their job was the hardest job in the world, and nobody else could possibly do it. I even met a dish washer that told me that one time.
How are the wages and benefits at Avista, hgimhof? Never hear anyone complain about those. Just how much is the average salary? Do they compensate for the “tremendous challenges?” Do you get stock options as an employee? Bonuses? Overtime?
hgimhof on May 19 at 2:25 p.m.
@Squid, the wages and benefits are good at Avista. I don’t know what the average salary is. No stock options (except for officers). Bonuses are paid based on performance measures like reducing outages and restoration times, meeting efficiency goals etc. Not much different than other businesses.
Maybe I can illustrate just a few of the tremendous challenges:
How hard do you think it would be to climb a power pole to make repairs on high voltage lines when the wind is blowing 40 mph, it’s snowing, dark and slippery?
Not up for the danger or physical challenge? How about designing a new 230,000 volt transmission line to improve reliability for the region? You only need to establish rights of way, negotiate leases, acquire material, hire contractors, etc. over a distance from Lewiston to Noxon. Simple right?
Or how about developing a smart grid system to improve efficiency and help customers monitor and manage their electric usage? It only takes a little engineering to make smart meters, capacitors, switch gear, various communication devices and such all talk to each other and help automate the grid.
Maybe something more on the order of upgrading a fifty year old hydroelectric project with new $33 million dollar turbines (that must fit within a fraction of an inch) so that more energy can be generated from the same amount of water.
Perhaps managing a relicensing project with more that 200 active stakeholders who all want something out of the process. There are too many new items that came out of that to list here.
Then there is integrating wind power and other renewable sources, that don’t always generate when you want them to, into the grid, without ever letting your power go out.
I could go on, but I’m sure this is already too long a list. I think one would have to agree that the utility biz is highly complex. The people who work in it earn their pay.
greenlibertarian on May 19 at 2:55 p.m.
Avista has a important job to do, of that I have no doubt. Having SEL so close by, I suppose, is also an advantage in grid management means and methods.
I just have a simple question I wanted that I stated upthread.
Why is Avista asking to raise its shareholder rate of return by a factor of 1.6 times higher than what it was (approx) over the past 5 years?
empyrius on May 19 at 3:07 p.m.
Can a brother get one of those PGA thingys???
And do I get that money from the shareholders, or can I get that as a direct debit withdrawal from Avista for tending to OUR dams and powerlines . . .
Dan_at_Avista on May 19 at 3:37 p.m.
Greenlib,
Our current Washington allowed return on equity is 10.2%. The request is for 10.9%. This is not a guarantee. The numbers you noted from the story are the actual return (which proves its not a guarantee). These are less than what was was allowed by regulators. We’re asking for an increase to 10.9% because we believe that is the fair return we should be earning.
mamachief on May 19 at 4:07 p.m.
I am sorry but I feel that Avista should suspend its bonus plan to all employees like other companies have done. The cost of living goes up and up however the pay for all does not. There are many people on fixed incomes that even the slightest change in their Avista bill is a hardship when their income has not changed.
I do realize that most count on the bonus to pay their bills however when you are talking about those that are making 80k a year then add a bonus amount to this, that is double what most 2 income households make in our area and have to get by.
Just my opinion…
Mike1950 on May 19 at 4:24 p.m.
Dan, who in the world in this economy wouldn’t want an increase for 10.2% to 10.9% return? However, that isn’t reality. Avista is talking about what they “believe” is a fair return they should be earning!!!!! Tell that to the Avista customers who have lost their jobs or have had to take pay cuts just to keep their jobs. I’ll bet everyone of them would “believe” they should have a better return too unfortunately they aren’t monopolies and they can’t go to a regulator and ask for more. Avista should be ashamed of themselves for this request on the heals or reporting sizable profits.
Squid on May 19 at 4:28 p.m.
Danger? I’m a framer by trade, so I know all about that. I walk on 2x6’s at over 85 feet in the air, or on a heavy pitched roof in those same weather conditions, only I am not in a bucket, and have no rope to keep me from hitting the ground. I could go on and on about the danger, but I won’t. As far as thinking, I have to figure out what the engineers couldn’t, on blueprints that they drew from a computer program. I have to constantly think about where things go, and the roof is never a snap together thing. Roofs are never completely laid out in any blue print, and most of them are very complicated these days. I also have to think about where the plumbers, heating/AC guys will be putting their stuff, and where all kinds of backing will be needed. What specifications are required in what place.
Honestly, aren’t legal right of ways done by lawyers? I don’t think Avista employees have to worry about anything to do with that, other than if it is approved or not.
All of the engineering stuff is done on a computer. All the Avista employee has to do is plug in the information that was provided. Pretty much data entry, isn’t it?
Wind power and renewable resources? Avista has none, other than the dams. You just have to allow it to enter your grid.
greenlibertarian on May 19 at 7:36 p.m.
Avista was testing an utility-scale solar (concentrating PV, I think), over in Rathdrum at a substation.
Don’t know whatever became of that. I believe much of the panel manufacturing occurred in Spokane.