Avista Corp., flying high on an over-the-top performance by itstrading subsidiary, and CMS Energy, buoyed by favorable powertransactions and cost reductions, both said Friday they will reportabove consensus estimates for the third quarter. Spokane, WA-basedAvista officially will report its earnings Oct. 25, and CMS,headquartered in Dearborn, MI, will follow the next day.

Avista’s good news probably could not have come at a bettertime. The company has been pummeled by falling earnings since themiddle of the year and faces lawsuits by shareholders who feel theywere deceived regarding company practices (see Daily GPI, Aug. 1).

Avista officials last week said that strong energy tradingrevenue from its unregulated Avista Energy subsidiary and abeneficial accounting change will contribute to “significantpositive earnings.” Analysts polled by First Call had expectedAvista to lose 13 cents a share, on average. For the third quarterof 1999, Avista reported a profit of 52 cents per share.

Avista Energy, the company’s energy trading subsidiary, hascaptured earnings opportunities in the California and westernregional marketplace. Avista Utilities also helped to mitigateexpected losses after obtaining an accounting order from the Stateof Washington that allows it to defer excess purchased power costsincurred through mid-2001.

“Avista Energy has done an outstanding job of capturing earningsopportunities in the rapidly changing California and westernregional marketplace,” said CEO T.M. “Tom” Matthews. “In theutility, we are preparing to comply with a ruling ordering us tofile a new rate case focused on a more permanent treatment ofpurchased power costs.”

Also anticipating a rosy third quarter report, CMS Energy saidFriday that it expects its earnings to jump between 10% and 15%higher than its previous estimate of 40 cents per share insustainable earnings, all related to “favorable power transactionsand cost reductions.”

Company officials said the earnings give CMS more confidence inits 2000 estimates, which remain unchanged at $2.50 a share. Theguidance assumes recovery this year of a 5% residential electricrate reduction, which, if not allowed, would reduce earnings by 18cents a share. Final accounting guidance is expected when theMichigan Public Service Commission issues its securitizationfinancing order on Oct. 24.

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