Avista Energy anticipates loss

Avista Corp.’s energy subsidiary has misjudged the volatile natural gas market and warned Wall Street analysts that it will lose money in the first quarter – its only loss in nearly five years.

“Markets didn’t respond as we anticipated,” said Avista spokesman Pat Lynch, referring to natural gas prices that have doubled during the past couple years.

Investors reacted coolly to the company’s Friday announcement. Shares dipped 50 cents to close at $17 as trade volumes were four times the norm.

Avista’s energy unit, the unregulated marketing arm of the Spokane company, was expected to deliver between 20 cents and 30 cents a share – about a fourth of Avista’s anticipated profit – this year.

The rest of Avista’s expected 2005 income, between 95 cents and $1.10 per diluted share, was to be derived from its regulated utility that serves more than 300,000 customers in four states. A third Avista subsidiary called Avista Advantage was expected to contribute a nickel per share.

Though the company has not yet disclosed the extent of losses, Lynch said Friday’s warning was necessary in light of the company’s earnings target shared with analysts last January.

More information will be available when Avista releases first-quarter results April 27.

In a press release, Avista CEO Gary Ely is quoted as saying the company has taken actions to address the issues of the first quarter. Lynch declined to elaborate.

During the height of the energy crisis, Avista Energy was a much larger contributor to corporate profit. Now that markets have somewhat settled, the energy unit is no longer expected to deliver such fantastic returns.