Avista sees steady sales this year
Avista Corp. predicted flat sales and static profit levels for 2007, due in part to the rejection of a rate increase by Washington state regulators last month.
The company anticipates once again filing for higher rates by midyear, though the revenues from a successful effort wouldn’t likely take effect until 2008.
The outlook, released Wednesday, put a damper on the company’s solid financial performance in 2006, including a nearly 62 percent rise in profits to $73.1 million on revenues of $1.51 billion, compared with a $45.1 million profit on revenues of $1.36 billion for 2005.
Most of that rise can be tied to a $20 million turnaround in its energy trading activities that are legally separated from the company-regulated utility unit that serves ratepayers in Spokane and North Idaho. Another $2 million can be attributed to better results from Advantage IQ, its Internet billing service business.
The utility delivered a $57.9 million profit to the company last year, up from $52.4 million in 2005. Scott Morris, president of the utility and incoming chairman and chief executive officer at the start of next year, said the utility made more money by adding retail customers, raising rates, and taking advantage of an arcane rule change that allows it keep more of the initial dollars that are earned during years when company dams are performing well. Last year, Morris said, hydropower generation at the company’s dams was 104 percent of average.
Despite the year-over-year improvements, the fourth quarter of 2006 saw profits and sales slide 29 percent to $18 million, or about 36 cents per share. That compares with a profit of $25.4 million, or 52 cents per share, during the October through December period of 2005.
The company said warmer weather resulted in less use of natural gas for heating. Also contributing to the difference was money received in 2005 as part of a settlement relating to the construction of the Coyote Springs 2 power plant and a reserve recorded for the potential refunds for taxes collected on Oregon rates that the company was able to record.
Shares of Avista fell 98 cents on the New York Stock Exchange.
Among the largest moves by Avista was the refinancing of about $150 million of debt accomplished by selling bonds and issuing $77.7 million worth of common stock to pay off some short-term debts and help bridge the costs of upgrading equipment that may ultimately be borne by ratepayers.
Earlier this week the company announced that Gary Ely would retire at the end of 2007, turning over leadership of the company to Morris.
This year’s highlights may include new licenses to operate its run of five dams on the Spokane River and the firm’s attempt to secure more electricity from windmills.