July 18, 2013 in Business

Avista absorbs hit as generator fails

By The Spokesman-Review
 

A generator failure at a Montana coal plant will force Avista Corp. to buy about $12 million worth of replacement electricity this year.

The Spokane-based utility owns a 15 percent interest in two units at the Colstrip generating plant located east of Billings. One of the units’ generators broke down July 1, and repairs could take six months to complete, said Thomas Dempsey, Avista’s manager of generation and joint projects.

Avista gets about 9 percent of its electricity from coal. The company will replace the lost electricity through purchases on the wholesale market, said Laurine Jue, an Avista spokeswoman.

Though customers won’t see an immediate increase in electrical rates, the higher costs could be passed on to consumers through later rate adjustments, she said.

Initial estimates indicate that repairing the unit will cost about $30 million, which will be shared proportionately among the utilities with ownership stakes in Colstrip. PPL Montana, which operates Colstrip, plans to file a property damage insurance claim on behalf of the plant’s owners.

The generator that failed was installed in the mid-1980s, Dempsey said. Some of the replacement parts have to be special-ordered, designed and manufactured, which accounts for the long outage period, he said.

The outage will affect Avista’s earnings for 2013, but company officials said they still expect earnings of $1.70 to $1.90 per share.

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