Citing some higher costs of short-term borrowings that will go away in the longer-term, Spokane, WA-based Avista Corp. last Wednesday reported lower second quarter profits, but sharply increased net income for the first half of this year, compared to similar periods last year. Avista’s CEO still expects 2006 to be a “good year.”

Second quarter net income was $13.5 million, or 27 cents/diluted share, compared with $18.6 million, or 38 cents/diluted share, for the same period in 2005. For the first six months, net income was $45 million, or 91 cents/diluted share, compared with $28.8 million, or 59 cents/diluted share, in the first half of last year.

Avista Utilities followed the same pattern with decreased profits the second quarter, but increased net income for the first six months. For the second quarter, utility profits were $16.8 million, or 34 cents/diluted share, compared with $18.4 million, or 38 cents/diluted share, for the same period in 2005. For the six-month period, net income was $43 million, or 87 cents/diluted share, compared to $37.3 million, or 76 cents/diluted share, for the same period last year. Improved hydroelectric power conditions were a major reason for the six-month improvement, the company said.

“We are on track for a good year in 2006 due to improved year-to-date earnings from Avista Utilities and the continued trend of earnings growth from Advantage IQ,” said Avista CEO Gary Ely. He said he is also satisfied with Avista’s merchant energy operations, which Ely considers “on track for the year as measured on an economic basis.”

Avista Energy’s reported results that were in the red “continue to differ from economic results due to the required accounting for certain contracts and assets under management,” Ely said.

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