Citing adverse regulatory decisions, particularly in Idaho, Spokane, WA-based Avista Corp. Thursday reported a third quarter loss of $9.8 million, or 20 cents/diluted share. The company revised its 2004 and 2005 earnings estimates upward, but the prospective gains were offset by the 20-cent/share impact of regulatory disallowances handed out in the third quarter.

For the third quarter last year, Avista reported net income of $4.3 million, or 9 cents/diluted share on revenues of $238.7 million. The losses for this year’s third quarter came off revenues of $241.5 million.

Avista CEO Gary Ely said the third quarter results were “dominated by disallowances of past costs ordered by the Idaho Public Utilities Commission in our general rate case,” adding that the company intends to seek reconsideration by the regulators of “some portions of the commission’s order.”

“The Energy Marketing segment’s third quarter results were below plan, yet, excluding the Idaho disallowances, the quarter’s earnings for both Avista Utilities and Avista Advantage were solid and slightly above our plan,” Ely said. “Our guidance for 2005 earnings reflects the company’s improving performance.”

Revenues were up everywhere except from Energy Marketing and Resource Management where the $7.6 million total for the third quarter was a little more than half of their total in the third quarter in 2003 ($12.7 million). In the utility operations, the Idaho PUC issued its general rate decision Oct. 8, awarding a combined electric/natural gas rate increase of $28 million, including $24.7 million in increased electric rate base. The company had originally asked for $40 million in total, later revising it downward to $35.2 million.

The regulatory hit caused the earnings projections for all of 2004 to be dampened. Avista had estimated 2004 earnings in the $1-$1.20/diluted share range, but the company said Thursday that is now in the $0.90-$1.05/share range. Avista Utilities earnings before the regulatory decisions were placed in the 75-90 cents/share range, which was revised upward to 85-95 cents/share, but the regulatory hit puts a 20-cent reduction on those estimates, leaving the net new utility projection at the 65-75 cents/share range.

“Plans call for the continuation of current business strategies, focusing on improving cash flows and earnings, and controlling costs while working to restore investment-grade credit ratings,” Avista said in its earnings announcement. Utility growth is expected to be in the 2%-3% range, the company said.

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