Wwp Must Not Break Ties That Bind

Washington Water Power Co. shocked the Inland Northwest last week, announcing it will change its name, chop its stock dividend, borrow more money and charge into a volatile national market where energy contracts trade like cattle futures.

Experts who know the utility industry declare this consistent with national trends. That’s true, but it still doesn’t diminish the surprise. It’s as if the Daughters of the American Revolution had pierced their tongues and formed a rock-‘n’-roll band. Utilities long have been among the most conservative investments on Wall Street, offering such stable dividends that many retirees entrusted life savings to utility stocks, expecting the dividends would roll on forever, steady as the Columbia.

Among these utilities, WWP has been a favorite son. It was “Spokane’s stock.” Eighty percent of its shareholders have been small investors; many were area residents who trusted their security to the stock because they knew and trusted the company, too.

For these investors, the 61 percent dividend cut causes real pain. Some will sell, incurring punitive capital gains taxes or a loss of principal, depending on their situation. Some will hold on, hoping that a possible, temporary conversion to preferred stock will cushion the dividend blow, and that with WWP’s new strategy, the stock’s price will recover and grow.

Although it’s cold comfort, it is in fact true that no stock investment comes with any guarantee.

WWP has been valued by the region in other ways, as well.

It has provided customers with good service and some of the lowest electrical rates in the nation.

It has been a pillar of leadership in regional business affairs. It has contributed generously to charities and community betterment projects.

This was in the utility’s best interest, for a local company thrives as the community grows and thrives.

We sincerely hope the company’s new mission will continue to embrace these traditions of local service and leadership. The new Avista Corp. may prosper in national markets. But its WWP utility division - built on revenue from captive customers - may be a foundation for Avista’s planned borrowing and can only be as healthy as the communities WWP serves.

However reluctantly, our region must acknowledge that it’s impossible to resist a changing national market. Mergers and acquisitions are the way of the modern world. Growth stocks are replacing income stocks.

Debt is replacing dividends. To survive, the old WWP had to change in this deliberate and fundamental way, says its new chief executive. The company’s board, individuals with roots in our region, agreed.

In the middle of a painful change, it can be difficult to embrace opportunities and growth that lie ahead. Difficult, but necessary.

In fact, WWP remained a stable company because it was able to adapt on other occasions, and prosper. These days, daughters and sons of the American revolution do listen to rock and roll. Avista will be a different company, but it intends to succeed. The region can only hope the new strategy proves beneficial for all concerned.