Avista Refuses Resignation From Chairman Matthews Was Ready To Take Blame For $90 Million In Losses

Avista Corp. Chairman Tom Matthews offered to submit his resignation this week, but the company’s board of directors refused, spokesman Steve Becker said Friday.

He said Matthews, who was away from Spokane on Friday, was prepared to step down and accept responsibility for losses Avista Utilities sustained in its electricity trading operations this spring.

The utility will lose $90 million for the quarter that ends June 30 and perhaps as much as $50 million more through October, when the last unfavorable energy contracts expire.

The trading losses will wipe out corporate profits for the quarter and year.

“Mr. Matthews recognized the magnitude of the situation and wished to be held accountable,” Becker said. “He offered his resignation and that was denied.”

Becker added that Matthews “has the full support of the board.”

Local board members Dave Clack and Larry Stanley were unavailable for comment Friday.

Matthews has led Avista since July 1, 1998, when he moved to Spokane from Houston.

A corporate headhunter had picked him out of the oil and gas industry, where he compiled a lengthy resume with firms such as Exxon and Texaco.

Avista, then known as Washington Water Power Co., had never hired a chairman from outside the company in its 111-year history.

Matthews moved quickly to put his imprint on the organization.

With the board’s consent, he cut the dividend sharply to conserve cash. The name change was announced. And he aggressively expanded the operations of subsidiaries in the energy trading and energy billing businesses.

Work accelerated at Avista Labs, the fuel cell subsidiary. Avista Communications was created by purchasing a majority stake in an existing Spokane company.

So far, the results have been mixed. Avista Energy quickly grew to become one of the largest energy trading businesses in the country, but the operation was shut down and a loss recorded when executives determined too much capital was a risk.

But Avista Advantage, an e-commerce venture that helps major corporations control energy costs, and Avista Labs have attracted interest from potential investors.

Avista has retained two Wall Street giants, Merrill Lynch and Goldman Sachs, to explore ways of maximizing the value of those operations.

Earlier this year, the company’s stock shot from about $16 to $68, lifted by favorable analyst comments and a significant investment by Microsoft co-founder Bill Gates.

The price has since tumbled back below $20, and Matthews told employees Friday his offer to resign was intended in part to restore share prices.

On Friday, Standard & Poor’s placed its ratings of Avista Corp.’s debt and preferred stock on “CreditWatch with negative implications,” after the company’s announcement of its expected losses. Other analysts have also downgraded Avista’s stock.