Doug Clark: Avista’s covered win or lose
Avista has given us so many blessings over the years.
Stratospheric executive salaries …
But Friday’s front-page story revealed that the power company has discovered how to never lose at gambling.
Let the ratepayers cover the losses.
OK. The suits at Avista probably wouldn’t use a crass word like “gambling” to describe the maneuver of “locking in” the prices of future natural gas purchases in hopes of outfoxing the mercurial marketplace.
“Hedging strategies” is the operative term for this financial game of chance.
“Getting reamed” is what this ratepayer calls it.
Say the power company guesses wrong – which sadly is too often the case – and agrees to pay more than what the gas winds up going for.
Just pass those losses along to consumers.
Can you spell S-U-C-K-E-R?
You know, I’d visit the Northern Quest Casino a whole lot more if I could use the hedging dodge.
Take what happened the last time I tried my luck there.
I shambled on over to the nearest roulette table and laid down four $5 chips on red.
Don’t ask me why. Call it intuition, but I just had one of those can’t-miss “feelings” about red.
The odds, I figured, were about 50/50 that the ball would land on a red or a black number. That’s about as close to a sure thing as you’ll ever find in a gambling den.
Whirl went the pretty wheel.
Clunk went the ball, which, after a dozen or so orbits, finally came to rest.
On a black number.
The day I start believing in ESP is the day we publish a story headlined “Psychic Wins Powerball.”
And so I waved adios to my chips.
Had I been using the Avista method, however, I would have …
Presented a bill to all the other gamblers.
Told them they had 30 days to cover my 20 bucks.
And, hey, would anyone like a twisty, poison-filled light bulb to take home as a souvenir?
“Thanks for playing,” I would add in the oleaginous tone of an affluent power baron.
Nobody would dare complain, of course.
Silent subservience is one of the perks that come with being the only game around.
Fortunately, I’m not the only one who is pinching his nostrils over how bad this hedging hooey smells.
The Washington attorney general’s office has been seeking more “regulatory review” of these hedging deals by utilities.
The AG’s Public Counsel Division claims that “Avista lost $11.9 million from November 2008 to October 2012 as a result of locking in prices for future gas purchases to avoid market fluctuation,” our story reported.
That’s quite a remarkable streak of losing when you think about it.
Granted, predicting gas prices can’t be the easiest thing in the world.
I sure wouldn’t want to try it. You have to factor in all kinds of variables, like global fuel demands or the impact the Chinese economy will have on future gas prices.
I have enough trouble trying to guess how much premium to put in my ’67 Vista Cruiser in order to drive to work.
But wouldn’t you think experts who are actually in the energy biz would be a little more adept when it comes to forecasting the price of natural gas?
Oh, well. Better luck next time.
Doug Clark can be reached at (509) 459-5432 firstname.lastname@example.org.