Although Avista Corp. has yet to garner much attention on WallStreet, the company is expecting its share price will rise as itsstrategy unfolds. Corporate strategy views technology and billconsolidation services as the gateway to a significant nationwidemarketing presence.

“Avista [formerly Washington Water Power] was the typicalmid-sized utility that existed for many years paying a nicedividend, but the problem is 11 of the last 12 years it paid outmore in dividend than it earned, and we had to restructure thecompany,” Avista Corp. CEO Thomas M. Matthews told Houston energyreporters Tuesday. Matthews said future growth will come fromtechnology and pointed to mid-cap utility Montana Power as the onlysuccess story among its peers because it has become a technologycompany.

On the technology side, Avista Corp. has the Internet billconsolidation business Avista Advantage, telecommunications inAvista Fiber and Avista Communications, and fuel cell anddistributed power technology in Avista Labs.

By signing up multiple-site end users for bill consolidationthrough Avista Advantage, Avista is building a list of customers itplans to target for sales of gas, power, and other commodities andservices.

“It’s all your bills, your water, your sewer, your electric,your telephone, your gas,” said Neil E. Kelley, chairman of Avistaaffiliate Avista Energy. “You go to the CFO of the company and yousay, ‘let me manage all of your bills for your 29 sites or 2,900sites around the country,’ and it’s a no-brainer. It’s overheadsavings. Then we’re in the door and the next step is we go to themand say, ‘now that we’re managing your bills, why don’t we manageyour purchases for you also..'” Not only will Avista be approachingprospects with whom it already has a relationship, but by havingmanaged prospects’ commodity and services billing the company willbe on the inside track with information on customer energyconsumption and costs.

Avista Energy sees the evolution of power generation aspresenting two opportunities. One is to optimize generation assetsfor the asset holders. Later, the company plans to take ownershippositions in assets themselves, but not in a manner that would putit in competition with its existing asset optimization clients,said Michael R. Kutsch, Avista Energy president.

“Our view of where the business is going is that many of the newat-risk asset owners lack commercial involvement capability,”Kutsch said. “Everyone is rushing out to be involved in the assetside of the business, buying other peoples’ assets..

“A power plant is an upside-down oil refinery. If you thinkabout it, that’s what it is. An oil refinery takes in one product,crude oil, and produces a bunch of other products. The value ofthat machine is determined by the inputs and the outputs. What’sdifferent in a power plant? Let’s reverse it. You take in a bunchof input-natural gas, oil, coal-and you put out an output. The onlydifference is in the oil business you never had ratepayers. Inbusinesses where you have these sorts of relationships between theinputs and the outputs, historically what we’ve seen is cyclical…Sometimes it’s good to be in the downstream marketing business inthe oil business. Sometimes it’s not so good because the capacitychanges with supply and demand in the marketplace. We don’t see areason that isn’t going to happen in electricity. The approach thatwe’re taking at Avista is to build the commercial capability andthen look at opportunities to make direct investments. In theintervening time of designing and implementing this strategy, wehave been able to strengthen our financial capability, so we thinkthat not only can we provide the commercial services if you will,we can participate as a financial investor in some of theseprojects as well.”

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