Utility loses $9.8 million

Avista Corp. announced Thursday a loss of $9.8 million in the third quarter, tied mostly to Idaho regulators’ recent decision not to allow the company to charge ratepayers for certain expenses.

Avista is appealing the decision that required the company to write off $14.7 million in expenses. The Idaho Public Utilities Commission decided that ratepayers shouldn’t be billed for certain cost overruns on Avista’s construction of a new gas-fired power plant or for losses incurred in some gas sales on the open market.

The $9.8 million equates to a loss of 20 cents per share, down from earnings of $4.3 million, or 9 cents a share, during the third quarter of 2003. The company earned $12.6 million through the end of September, or 26 cents a share, down from $28.3 million, or 58 cents a share, for the same time period last year, Avista announced in a news release.

On a positive note, company subsidiary Avista Advantage announced its first quarterly profit. The subsidiary, which provides energy management, analysis and billing for major companies, reported earnings of a penny per share, up from a loss of a penny per share during the third quarter of last year.

Avista Utilities President Scott Morris is serving as interim CEO of Avista Advantage while that company searches for a new top executive. Morris said Advantage had signed 23,000 new accounts in the past 30 days, including contracts with three of the nation’s top 20 retailers in the automotive, video rental and electronics fields. The new accounts come from five or six new customers, Morris said in a Thursday morning conference call with analysts. Each of the accounts represents one of the customer’s locations. For example, a video rental chain might have 10,000 locations nationwide.Company officials said Avista’s planned $62.5 million purchase of half of a 280-megawatt power plant in Boardman, Ore., is likely to eventually be included in customer rates.

“We’d expect to request rate-making treatment in the first half of 2005,” said Avista CEO and President Gary Ely in Thursday morning’s meeting.

The deal with bankrupt Mirant Corp. still needs to be approved by the bankruptcy court and the Federal Energy Regulatory Commission. Morris said buying back the half-share of the plant, which the company originally sold to Mirant to make money during the energy crisis of 2000 and 2001, was an “outstanding opportunity to purchase it at unique prices.”

Avista’s long-term resource portfolio shows a need for 150 more megawatts of gas generation for which the company assumed it would have to pay $750 per kilowatt. Avista bought the half-share in Coyote Springs II for $439 per kilowatt instead, Morris said.

The company plans to pay for Coyote Springs partially through the sale of its natural gas holdings in California and by stretching out repayment of high-cost debt, Avista officials said.