Avista profit triples in first quarter

Avista Corp.’s profits tripled during the first quarter and investors drove the share price to a five-year high.

The Spokane company’s finances were bolstered by its utility division’s sale of surplus electricity in the marketplace and its collection of higher customer rates.

During the first three months of the year, Avista reported earnings of $31.6 million on revenues of $499.2 million, compared with earnings of $10.2 million on revenues of $362.7 million during the same period last year.

The higher earnings — 64 cents per share versus 21 cents per share last year — come on the heels of customer complaints that the utility is squeezing too much money from residential and business customers through higher electricity and natural gas rates.

Yet the improved results were not solely due to the performance of its utility, the government regulated monopoly that serves most of Spokane and North Idaho.

A $13.4 million turnaround in Avista’s energy trading division compared with a year ago added 10 cents a share to investors.

Avista’s strong earnings spurred brisk trading that was about fivefold above average and pushed the stock price to $21.61 a share. Shares had closed at $21 the previous day. Financial analyst Jim Bellessa of D.A. Davidson & Co. affirmed a positive rating on Avista.

Avista is allowed by state regulators to earn an approximate 9 percent return. Though the company has yet to reach its authorized rate of return, it’s getting close at more than 8 percent, said spokeswoman Jessie Wuerst.

Despite the profitable quarter, Avista did not change its more conservative outlook for the rest of the year.

The good snow pack — now at about 104 percent of normal — should reward the company with above-average runoff and ample water to spin electricity-generating turbines at the company’s Northwest dams until late summer.

Avista’s sale of surplus electricity helped the company take advantage of a complicated program called the Washington Energy Recovery Mechanism (ERM) deadband, which allows it to keep up to $9 million of any profits from such sales. If Avista tops the $9 million profit level, it must share the benefit with ratepayers.

Conversely, the company also must eat the first $9 million if it must buy power to meet the expected needs of its ratepayers.

Though the ERM helped Avista during the first quarter, it has always ended up costing the company money during its history. That may happen again this year.

The company’s electricity supply will lean more heavily on natural gas-fired power plants in the fall and winter, and the high price of natural gas is expected to eat into the profits the company enjoyed in the first quarter, said Malyn Malquist, Avista’s chief financial officer.

Avista dislikes the ERM deadband and has made a filing with the Washington Utility and Transportation Commission to eliminate or at least reduce it.